The Spanish-owned bank, which was due to report its earnings on Wednesday, has put the announcement on hold pending greater clarity on proposals from the Financial Conduct Authority (FCA).

The scandal relates to commissions on car finance deals paid by lenders to motor dealerships over many years, which the regulator found were often not clearly disclosed and led to higher costs for consumers. The FCA has estimated that the mis-selling scandal will cost lenders a total of £11 billion, making it one of the largest compensation schemes to affect UK banks. Santander is currently liable for £295 million.

Mike Regnier, Santander UK’s outgoing chief executive, urged the government to intervene, warning of serious economic repercussions. “We believe that the level of concern in the industry and market is such that material changes to the proposed FCA redress scheme should be an active consideration for the UK government,” he said.

Mr Regnier cautioned that without such changes, “the unintended consequences for the car finance market, the supply of credit and the resulting negative impact on the automotive industry and its supply chain could significantly impact jobs, growth and the broader UK economy”.

In response, a spokesperson for the FCA defended its plan. “We believe a compensation scheme is the best way to settle, for both lenders and consumers, liabilities that exist no matter what. Alternatives would cost more and take longer,” they stated. “It’s vital we draw a line under the issue so a trusted motor finance market can continue to serve millions of families every year.”

Santander said it expects to be able to provide further information on the matter in its fourth-quarter results.