7:42 am, October 29, 2026
Santander UK has blamed the fallout from the motor finance scandal as a key factor for a drop in profits.
The lender reported a pre-tax profit of £1.2bn for the first nine months of 2026, down 6% on the same period last year.
Bosses said the decline was mainly due to a charge taken in the first quarter relating to historic motor finance commission payments, alongside higher restructuring costs.
Santander has now earmarked £616m to cover potential liabilities arising from the Financial Conduct Authority’s proposed motor finance compensation scheme.
The scheme is intended to compensate customers affected by unfair commission arrangements on car finance agreements, although its implementation is currently being held up by legal challenges.
The provision highlights the continuing financial impact of the scandal on major lenders, with banks and motor finance providers facing the prospect of substantial payouts.
Despite the hit to its year-to-date performance, Santander’s latest quarterly figures showed a considerable improvement.
Pre-tax profits for the three months from July to September rose to £630m, compared with £372m during the same period in 2025.
The bank’s acquisition of TSB helped boost its performance, with the former rival contributing £96m in profits between May and September.
The bank is continuing to integrate TSB into its wider business, with almost 1,000 employees transferring at the beginning of October.
Bosses expect the merger to generate around £400m in cost savings by the end of 2028.
UK chief executive Mahesh Aditya said the bank remained focused on improving efficiency while integrating TSB.
He said: ‘We also continued to deliver against our wider strategic priorities to deepen customer relationships and enhance operational efficiency, while leveraging Banco Santander’s global technology platforms and AI capabilities to provide the support our customers need.’
The results come as uncertainty continues over the final shape and cost of the FCA’s motor finance compensation scheme.