BMW Seeks Meeting With Rachel Reeves — Can Chancellor Find Middle Ground in £11BN Row?

BMW is seeking a meeting with Chancellor Rachel Reeves as the UK's proposed motor-finance compensation scheme gathers pace and industry costs mount.

According to The Times, the German automaker wants clarity on how the Financial Conduct Authority's (FCA) plan would hit manufacturers and their in-house lenders. BMW's UK finance arm has already booked about £207 million to cover potential exposure.

FCA's £11 Billion Redress Proposal

The FCA last week launched consultations on an industry-wide redress programme for drivers who were overcharged because of dealer commission models that rewarded higher interest rates.

The regulator estimates around 14 million finance agreements made between 2007 and 2024 may have been unfair, with an average redress of £700 per agreement.

Depending on participation levels, the FCA estimates total compensation at £8.2 billion, rising to £9.7 billion in a high-take-up scenario. Administrative costs could push the overall bill to nearly £11 billion.

Industry Pushback and Mounting Provisions

Backlash from the financial sector has been swift. The Finance & Leasing Association has questioned the FCA's assumptions, while South Africa's FirstRand, parent company of MotoNovo, labelled the scheme 'disproportionate.'

Major UK lenders have already warned of rising costs. Lloyds Banking Group (through its Black Horse unit) expects to add an extra £800 million to its provisions, while Close Brothers has also flagged higher expenses.

Carmakers Brace for Financial Impact

Manufacturers are also preparing for significant financial strain. Renault's RCI Financial Services has earmarked about £73.6 million, according to recent filings, while BMW's UK finance division disclosed more than £200 million of provisions in September, The Times reported.

Wider Policy Concerns Beyond Redress

BMW is expected to use the potential meeting with the Chancellor to discuss broader policy issues, including the UK's electric vehicle strategy and the investment climate.

Treasury officials have indicated that the government aims to strike a balance between ensuring fair consumer redress and maintaining financial stability in the sector.

The FCA's consultation paper (CP25/27) will remain open for feedback through November 2025, with final rules expected in early 2026.

What's at Stake

The FCA's plan prioritises swift, standardised payouts for millions of drivers who may have been mis-sold finance deals. However, carmakers and lenders argue the scheme's scope and costs are excessive, warning it could damage investment and profitability in the UK motor industry.

BMW's push for direct talks with the Treasury underscores how seriously the automotive sector is treating the threat of an £11 billion-plus hit to motor finance — one of the largest consumer redress efforts in UK financial history.