Santander UK has called for the Government to intervene in the Financial Conduct Authority’s (FCA’s) redress scheme relating to historical motor finance commission arrangements.

The bank has also opted not to publish its Q3 results which it would have done today, stating it wants more clarity regarding the regulator’s proposals and their potential impact on Santander UK and the wider market.

Earlier this month, the FCA published a consultation on a proposed industry-wide redress scheme in relation to its investigation into historic motor finance discretionary commission arrangements (DCAs), which have been under review by the regulator since January last year.

This came after the FCA’s 2021 ban on DCAs had removed the incentive for brokers to increase the interest rate that a customer pays for their motor finance. However, a high number of complaints from customers to motor finance firms followed, claiming compensation for commission arrangements prior to this ban.

Santander UK said it was reviewing the FCA’s consultation in detail to understand its potential implications and warned that the proposed redress scheme could significantly impact “jobs, growth and the broader UK economy”.

Several other motor finance providers affected by the planned £11bn compensation scheme – including Lloyds, Close Brothers and Barclays – have already set aside further funds for potential redress this month, since the FCA published its paper.

“We believe that the level of concern in the industry and market is such that material changes to the proposed FCA redress scheme should be an active consideration for the UK Government,” Santander UK chief executive, Mike Regnier, said.

“Without such change, the unintended consequences for the car finance market, the supply of credit and the resulting negative impact on the automotive industry and its supply chain could significantly impact jobs, growth and the broader UK economy. This could also cause significant detriment to the consumer.”

Amid the uncertainty surround the FCA’s action on the scheme, Santander UK decided to postpone its Q3 results, but indicated it would provide more information in its Q4 results.

The bank suggested that in a “severe downside scenario”, any potential increase to the existing provision for the scheme would have a “material adverse impact” on its liquidity positions, operations, financial condition, and prospects.

“While the FCA considers the outcome of its consultation, we believe it is our duty to do all we can to secure an orderly and fair outcome from this consultation process,” Regnier added.

“This is not a question of investor versus customer interest, quite the reverse. What is at stake is the supply of credit that customers need and that supports a very important sector for the economy.”

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