9:27 am, September 23, 2026
BMW has set aside more than £600m to cover its potential car finance compensation bill as its British motor finance business swung to a £139.3m pre-tax loss.
The German car giant’s UK finance arm increased its provision for the motor finance mis-selling scandal by more than £400m last year, taking the total to £611.6m.
The growing compensation bill helped push BMW Financial Services (GB) Limited into the red in 2025, following a £39.1m pre-tax profit the previous year.
The figures, reported by The Times, were revealed in accounts filed at Companies House by the Farnborough-based lender.
BMW had previously set aside around £207m to cover expected compensation payments by the end of 2024 but increased the provision substantially as the Financial Conduct Authority (FCA) developed its proposed redress scheme.
The £611.6m figure represents the provision remaining at the end of December 2025, after BMW used around £8m during the year.
The business has also earmarked a further £25.5m for finance agreements that fall outside the FCA’s proposed scheme but could still result in customer complaints or legal claims.
BMW warned that its eventual compensation bill could be ‘materially different’ from the amount currently set aside, given the uncertainty surrounding the regulator’s plans.
The provision is among the largest announced by lenders caught up in the motor finance scandal.
According to The Times, Mercedes-Benz’s UK motor finance business has set aside £424m, while Ford’s British finance subsidiary has made a £155m provision.
Lloyds Banking Group faces an even larger bill, having earmarked £1.95bn, while Santander UK’s provision stood at £623m at the end of June.
The scandal centres on commission arrangements between lenders and motor dealers, including payments that were not adequately disclosed to customers.
The FCA has proposed an industry-wide redress scheme which it estimates would result in £7.5bn being paid to motorists who took out affected finance agreements between 2007 and 2024.
Lenders could also face another £1.6bn in administration costs.
However, the regulator has paused its plans following legal challenges brought by the UK motor finance arms of Mercedes-Benz, Volkswagen and Crédit Agricole, as well as consumer group Consumer Voice.
The three lenders argue that the proposed scheme is unlawful, while Consumer Voice claims it would leave motorists inadequately compensated.
The challenges are due to be heard by the Upper Tribunal in either December 2026 or February 2027.
The FCA has warned that the industry’s compensation bill could rise by more than £6bn if the legal challenges force it to abandon its proposed scheme and leave lenders to deal with compensation claims individually.
BMW UK did not respond to The Times’ requests for comment.