Santander has renewed its criticism of the City regulator after its damages bill for Britain’s motor vehicle finance scandal rose to more than £460 million, while the bank’s Spanish parent pressed ahead with a surprise $12 billion takeover in the United States.
Santander’s UK arm said it had set aside a further £183 million to cover compensation relating to unfair car loan commission arrangements between lenders and dealers, bringing its total provision for the scandal to £461 million.
However, the lender accused the Financial Conduct Authority of regulatory overreach, arguing that the proposed compensation scheme went beyond addressing customer harm and risked causing greater economic harm.
Santander said the regulator’s plans for a compensation scheme, which could amount to up to £11 billion industry-wide, lacked sufficient clarity and would go beyond addressing proven financial losses. The bank warned that the proposals could ultimately harm consumers, jobs and competition in the credit market.
Mike Regnier, chief executive of Santander UK, has previously called on the government to intervene, arguing that the current framework has unintended consequences. Last October, the lender canceled a planned quarterly earnings update, citing uncertainty over the FCA’s approach to remediation.
Despite rising compensation payments, Santander UK reported a 14 percent rise in pre-tax profits to £1.5 billion for 2025, underlining the resilience of its domestic business. The parent company, Banco Santander, reported a 12 percent rise in net profit for the year to a record 14.1 billion euros (12.1 billion pounds).
The new regulatory conflict comes as Banco Santander accelerates its expansion in Anglo-Saxon markets. On Tuesday evening, the group announced a $12.2 billion cash and stock acquisition of Webster Bank, which would create the 10th largest commercial and retail banking group in the United States.
The acquisition will significantly reshape Santander’s U.S. presence, adding about 200 branches and shifting the business beyond its historic focus on near-prime and subprime auto loans. Once completed, the expanded US operation will have assets of around $327 billion (£238 billion), including $185 billion in loans and $172 billion in deposits.
Ana Botín, chief executive of Banco Santander, described the deal as an important strategic move that would strengthen the group’s US business, improve profitability and create cost efficiencies. However, investors appeared cautious as Santander shares fell around 3 percent in early trading following the announcement.
The Webster transaction follows a series of recent acquisitions by Santander. In July the group agreed to buy British high street lender TSB from rival Sabadell for £2.6 billion. This makes Santander the UK’s third largest bank by personal current account deposits, after Lloyds and NatWest.
The TSB acquisition will bring five million customers, 175 branches and around 5,000 employees to Santander UK, which already serves around 14 million customers across around 350 branches. Analysts are watching closely to see whether the group moves to cut overlapping roles, streamline branches or abandon the 215-year-old TSB brand as integration progresses.
With increasing regulatory pressure at home and continued aggressive expansion abroad, Santander must now balance political control, consumer protection and shareholder expectations in multiple markets.
