Santander has renewed its criticism of the City watchdog after its compensation bill for the UK motor finance scandal climbed above £460 million, as the bank’s Spanish parent pressed ahead with a surprise $12 billion takeover in the United States.
The UK arm of Santander said it had set aside a further £183 million to cover compensation linked to unfair car loan commission arrangements between lenders and dealers, taking its total provision for the scandal to £461 million.
However, the lender accused the Financial Conduct Authority of regulatory overreach, arguing that the proposed redress scheme goes beyond reversing customer harm and risks creating wider economic damage.
Santander said the regulator’s plans for a compensation programme, which could total as much as £11 billion across the industry, lack sufficient clarity and extend beyond addressing proven financial loss. The bank warned that the proposals could ultimately harm consumers, jobs and competition in the lending market.
Mike Regnier, chief executive of Santander UK, has previously urged the government to intervene, arguing that the current framework risks unintended consequences. Last October, the lender cancelled a scheduled quarterly results update, citing uncertainty over the FCA’s approach to redress.
Despite the growing compensation bill, Santander UK reported a 14 per cent increase in pre-tax profits for 2025 to £1.5 billion, underlining the resilience of its domestic business. Its parent company, Banco Santander, posted a 12 per cent rise in net profits to a record €14.1 billion (£12.1 billion) for the year.
The fresh regulatory clash comes as Banco Santander accelerates its expansion in Anglo-Saxon markets. On Tuesday night, the group announced a $12.2 billion cash-and-shares takeover of Webster Bank, a move that will create the tenth-largest commercial and retail banking group in the United States.
The acquisition will significantly reshape Santander’s US presence, adding around 200 branches and shifting the business beyond its historical focus on near-prime and sub-prime car lending. Once completed, the enlarged US operation will have assets of approximately $327 billion (£238 billion), with $185 billion in loans and $172 billion in deposits.
Ana Botín, executive chair of Banco Santander, described the deal as an important strategic step that would strengthen the group’s US franchise, improve profitability and generate cost efficiencies. However, investors appeared cautious, with Santander’s shares falling around 3 per cent in early trading following the announcement.
The Webster transaction follows a series of recent acquisitions by Santander. In July, the group agreed to buy UK high street lender TSB from rival Sabadell for £2.6 billion, a deal that will make Santander the UK’s third-largest bank by personal current account deposits, behind Lloyds and NatWest.
The TSB takeover will bring five million customers, 175 branches and around 5,000 staff into Santander UK, which already serves roughly 14 million customers through about 350 branches. Analysts are watching closely to see whether the group moves to cut overlapping roles, rationalise branches or retire the 215-year-old TSB brand as integration progresses.
With regulatory pressure mounting at home and aggressive expansion continuing overseas, Santander now finds itself balancing political scrutiny, consumer redress and shareholder expectations across multiple markets.
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Santander attacks FCA ‘overreach’ as UK car finance scandal bill passes £460m