Santander has renewed its criticism of UK regulators as its compensation bill for the motor finance scandal climbed above £460 million, even as the bank’s Spanish parent advanced a surprise $12 billion takeover in the United States.
Santander UK said it had set aside an additional £183 million to cover compensation related to unfair car loan commission arrangements between lenders and dealers, bringing its total provision for the scandal to £461 million. The UK lender, however, accused the Financial Conduct Authority (FCA) of exceeding its regulatory mandate.
The bank argued that the FCA’s proposed compensation scheme, which could reach £11 billion across the sector, goes beyond reversing actual customer harm. Santander warned that the regulator’s approach could unintentionally damage jobs, competition, and the broader lending market.
Mike Regnier, chief executive of Santander UK, has previously called on the government to intervene, stressing that the framework risks unintended consequences. Last October, the bank cancelled a scheduled quarterly results update amid ongoing uncertainty over the FCA’s plans for redress.
Despite the growing compensation provision, Santander UK reported a 14 percent rise in pre-tax profits for 2025, reaching £1.5 billion, demonstrating the resilience of its domestic operations. Its parent company, Banco Santander, posted a 12 percent increase in net profits to a record €14.1 billion (£12.1 billion) for the year.
The regulatory clash comes as Banco Santander accelerates its expansion in the US. On Tuesday, the group announced a $12.2 billion cash-and-shares takeover of Webster Bank, which will create the tenth-largest commercial and retail banking group in the country.
The acquisition will add around 200 branches and diversify Santander’s US business beyond its historical focus on near-prime and sub-prime car lending. Once completed, the enlarged operation will hold assets of roughly $327 billion (£238 billion), including $185 billion in loans and $172 billion in deposits. Ana Botín, executive chair of Banco Santander, described the deal as a strategic step to strengthen the US franchise, improve profitability, and achieve cost efficiencies. Following the announcement, Santander shares fell about 3 percent in early trading.
The Webster deal follows a series of recent acquisitions by the group. In July, Banco Santander agreed to acquire UK high street lender TSB from rival Sabadell for £2.6 billion, a move set to make Santander the UK’s third-largest bank by personal current account deposits. The TSB takeover will bring five million customers, 175 branches, and roughly 5,000 staff into Santander UK, which already serves around 14 million customers through about 350 branches. Analysts are watching whether the bank will cut overlapping roles, consolidate branches, or retire the TSB brand as integration progresses.
With regulatory pressure mounting in the UK and aggressive expansion abroad, Santander faces the challenge of balancing political scrutiny, consumer compensation, and shareholder expectations across multiple markets.
