Ford sets aside £61m amid car finance mis-selling probe

Ford’s motor finance subsidiary FCE Bank has set aside £61 million to cover potential compensation claims as it awaits a crucial Supreme Court judgment which could see lenders paying out huge damages to customers for historic car finance mis-selling practices.

The Financial Conduct Authority (FCA) is currently investigating discretionary commission arrangements (DCAs), a now-banned system that allowed car dealers and brokers to inflate interest rates for higher commissions.

Subject to an crucial appeal ruling which is due this summer, the FCA could launch a redress programme that could compel lenders to identify and reimburse affected customers.

FCE Bank’s provision is a significant acknowledgement of the potential fallout. In its strategic report for 2024, the bank confirmed that it set aside £61million in 2024, to “reflect the estimated economic outflow in relation to commission arrangements to cover the potential FCA redress scheme, including estimated operational, legal and litigation costs”.

“The estimated expected value is based on several probability-weighted scenarios including potential redress based on an estimation of customer harm. On the basis of FCA’s Statement published on 11 March 2025, the scenarios considered reflect FCA’s indication that, should it conclude that motor finance customers have lost out from widespread failings by firms, it is likely that it will launch an industry wide statutory redress scheme.”

“Statutory interest is applied and included as part of the overall provision estimate. However, while the FCA review is progressing and pending the outcome of the appeal to the Supreme Court, there remains significant uncertainty as to the extent of customer loss and the terms of any potential redress scheme.”

FCE Bank, headquartered in the UK with branches in France, Spain, and Ireland, and an operating subsidiary in Italy, provides loans to around 436,000 retail customers and wholesale funding to 270 dealer groups. The UK represents its most substantial markets, accounting for 49% of its portfolio.

Despite the mounting regulatory pressure, FCE Bank reported a robust pre-tax profit of £284m for the latest financial year. However, this figure includes £167m from discontinued operations, meaning profit from continuing operations stood at £117 million - up £20 million from the previous year.