Stellantis Braces For Thirty Seven Million Pound Hit From Car Finance Scandal

Stellantis, the automotive group behind brands such as Vauxhall and Peugeot, is preparing for a staggering £37 million financial blow amid the ongoing mis selling scandal affecting the motor loans industry. The Group’s UK finance arm, based in the Netherlands, has disclosed significant provisions as regulators move closer to announcing a sweeping compensation scheme for consumers.

The scandal revolves around hidden commissions that car dealers received from lenders when arranging motor finance agreements. Under so called discretionary commission arrangements, dealers could set customer interest rates, pocketing higher commissions for hiking borrowing costs. This system, which fostered serious conflicts of interest, was banned by the Financial Conduct Authority in January 2021, but an estimated 14.6 million finance deals completed since 2007 remain under scrutiny.

Recent filings at Companies House by Stellantis Financial Services UK, in partnership with French bank BNP Paribas, confirm that the company allocated a £37 million fund in 2024 for potential claims. This follows the regulator’s initial findings and precedes its final plans for industry wide redress, which could amount to as much as £18 billion across the sector. The compensation programme is set to be the most extensive since the infamous payment protection insurance debacle, potentially resulting in millions of drivers recouping hundreds of pounds each.

Major players across the market are making similar moves. Lloyds Banking Group has set aside £1.15 billion, while Santander UK has earmarked £295 million and the British arm of BMW has established a £70 million reserve. The Supreme Court’s recent clarification regarding non discretionary commission arrangements has paved the way for the regulator to expand the scheme’s scope to these types as well, potentially increasing the compensation required.

This has spurred a surge of activity from claims management firms and law companies eager to capitalise on the wave of redress, though the regulator assures consumers that its process will be freely accessible and does not require third party involvement. The FCA is now poised to launch a formal consultation on the compensation scheme, with disbursements expected to begin next year.

Stellantis has not issued any public comment in relation to its provisions or the impending redress scheme. The industry now awaits further guidance as regulators refine the compensation process and clarify the final liabilities facing lenders and manufacturers alike.