Barclays will this week become the first major UK lender to begin offering compensation payments to former motor finance customers, even as the industry's big financiers face waiting months for the outcome of challenges to a £9bn redress scheme.

Sky News has learnt that Barclays is drawing up plans to make the payouts to a limited pool of borrowers, and will write to them to set out their offers within days, according to insiders.

Sources said the recipients of the compensation offers would account for a small proportion of Barclays' total £430m bill for motor finance mis-selling.

One added that Barclays' move related predominantly to so-called 'Johnson cases', a reference to claims involving an undisclosed contractual tie and/or a discretionary commission arrangement, as well as commission of at least 50% of the total cost of credit and 22.5% of the loan.

The Financial Conduct Authority announced details of a massive redress programme earlier this year, with parts of it fiercely contested by a number of lenders.

Legal challenges by a group of car manufacturers' finance arms - including VW and Mercedes-Benz - as well as Consumer Voice and Credit Agricole, will be heard by the Upper Tribunal in February.

Major banks including Barclays, Lloyds Banking Group and Santander UK also considered lodging legal challenges but ultimately decided not to proceed. The 'Johnson' claimants are understood to comprise a very small proportion of cases across the industry.

"These are the slamdunk cases," said one source. "There can be no doubt about the merits of paying out such claims."

Barclays' decision to pursue a swifter settlement of these claims was flagged as a possibility in its recent third-quarter results statement, in which it said: "In [the third quarter of] 2026, the Upper Tribunal ordered a suspension of parts of the redress scheme following four legal challenges to the FCA's final rules. "The legal challenges are to be heard by the Upper Tribunal in [the first quarter of 20]27.

"These challenges will delay and may otherwise affect the implementation of the redress scheme although the FCA has indicated a willingness to consider how, despite such challenges, firms may be able to pay redress in line with its proposed scheme to certain cohorts of eligible customers in advance of the Upper Tribunal hearing.

"Barclays is considering this option, which would be within the scope of its existing provision estimate." Industry sources said the FCA planned to set out ion Tuesday ts expectations of lenders making settlement offers to customers outside its £9.1bn redress scheme.

It has already stipulated that any compensation offers made outside of its redress scheme must be at least as generous as the payments for which customers will be eligible from the regulator's compensation programme.

The motor finance scandal has become the City's biggest, in financial terms, since the one relating to payment protection insurance (PPI) erupted about 15 years ago.

Its emergence has prompted at least one major motor finance provider to collapse, while another bank - Aldermore - has been put up for sale by its South African owner as a result of a huge redress liability. Barclays and the FCA declined to comment further.