6:00 am, July 31, 2026
Used car finance provider Blue Motor Finance entered administration yesterday – but the business was immediately sold to Hodge Bank in a pre-pack deal.
The Financial Conduct Authority (FCA) confirmed yesterday that Simon Edel, Richard Barker and Alan Michael Hudson of EY had been appointed joint administrators of Blue Motor Finance.
The firm, which operated as a lender to consumers buying used vehicles through dealer and broker partners, had suffered years of losses and faced mounting motor finance compensation liabilities.
At the same time, Hodge Bank completed the acquisition of the business, meaning Blue Motor Finance’s brand, operations and employees will continue under new ownership.
The administration follows months of uncertainty over Blue Motor Finance’s future.
In May, Car Dealer reported the lender was ‘teetering on the brink of collapse’ after reports it was facing a motor finance redress bill of more than £50m.
At the time, dealers were told the reports were ‘false’, with finance representatives insisting media claims had been based on misinformation.
The FCA said yesterday that Blue Motor Finance had ‘been running at a loss for a number of years and faced significant compensation liabilities it could not meet’.
While the firm has stopped writing new loans, existing finance agreements remain in place and customers have been told to continue making repayments as normal.
The regulator also warned that customers owed compensation are now unlikely to receive the full amount they are due.
In a statement, the FCA said: ‘We are engaging with BMFL and the joint administrators to ensure the best outcomes for customers who are owed compensation.
‘However, customers are unlikely to receive all the money they’re owed.’
The regulator added that it had worked with the lender before the administration to ensure its decisions ‘secured the best outcome for redress consumers’, saying alternative options would have reduced the likelihood of compensation being paid.
Law firm Slaughter and May, which advised Blue Motor Finance on the transaction, said the sale to Hodge Bank secured the future of the business as a going concern while ‘maximising the value available for distribution to motor finance redress claimants’.
Blue Motor Finance specialised in funding used vehicle purchases through a nationwide network of car dealers and finance brokers.
Dealers with existing agreements will see the lending business continue under Hodge Bank ownership, although Blue Motor Finance is no longer writing new finance agreements.