- BMW Financial Services UK increased its provision from £206m to £612m.
- The FCA scheme covers around 12.1 million historic car finance agreements.
- Legal challenges could still change the size and timing of the payouts.
BMW has set aside £612 million to cover claims linked to the UK's motor finance mis-selling scandal, making it one of the largest provisions announced by a lender so far.
BMW Financial Services UK increased its provision from £206m in 2024 to £612m in 2025, according to newly filed accounts.
The company is now facing a larger provision than Barclays, which expects to pay about £430m, and Close Brothers, which has set aside £320m. Lloyds Banking Group remains the largest affected lender, with a £1.95bn provision.
The scale of the provisions reflects the size of the Financial Conduct Authority's (FCA) compensation scheme, which covers around 12.1 million historic motor finance agreements.
Under the scheme, eligible motorists could receive an average payout of around £830. The FCA estimates that lenders will pay about £7.5bn in compensation, with a further £1.5bn expected to cover administration costs.
How the scandal hit car finance
The scandal centres on commissions paid by lenders to car dealers for arranging motor finance.
The FCA found that some commission arrangements were not properly disclosed to customers, creating concerns about whether motorists received fair deals when taking out car finance.
BMW Financial Services UK has already felt the financial impact. Its pre-tax result swung from a £39m profit in 2024 to a £139m loss in 2025.
BMW also set aside a further £25.5m for agreements that are outside the FCA's proposed redress scheme but could still result in legal claims.
The company warned that the final cost could be “materially different” because of ongoing legal challenges and the possibility of consumers pursuing claims through the courts.
Billions at stake
The FCA's scheme is facing legal challenges from the UK motor finance arms of Mercedes-Benz and Volkswagen, as well as French bank Crédit Agricole.
A separate mass-claim action led by Consumer Voice, a campaign group supported by Courmacs Legal, is also arguing that the FCA's proposed compensation does not go far enough for affected motorists.
The legal challenges could affect both the scope of the scheme and when consumers receive compensation.
Sarah Pritchard, deputy chief executive of the FCA, said earlier this year that payments could be delayed until 2027 if the legal challenges continue.
Nikhil Rathi, the FCA's chief executive, has also warned that the compensation scheme could be “struck down in whole or part”.
A hearing over the legal challenges is expected in either December or February 2027.
BMW said its provision had been made in line with the FCA's published redress scheme and that it would continue to report on the matter through its regular BMW Group financial statements.
For motorists, the eventual payout will depend not only on whether they qualify for compensation, but also on how the legal challenges affect the FCA's scheme.
