Drivers are being urged to prepare for compensation payouts which could begin as soon as next year from the car finance commission scandal.
Earlier this month, the Financial Conduct Authority (FCA) confirmed that it would be launching a consultation on a compensation scheme.
The regulator stated that many motor finance firms were failing to adhere to rules by not providing customers with relevant information when they were buying a car.
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Drivers were not informed about the commission paid by lenders to the car dealers who sold the loans.
Millions of drivers could be in line to receive compensation
|GETTY
As a result of the commission scandal, the FCA aims to launch a consultation on the issue in early October.
If the FCA agrees to move forward with a compensation scheme, it hopes that the first payments will be made next year.
The FCA believes that the total cost of the compensation scheme will not be much lower than £9billion, but is unlikely to exceed £18billion.
Estimates suggest that the average value of compensation per agreement could amount to £950, although this may vary depending on certain factors.
The FCA will consult on a potential redress scheme for the car finance scandal
| REUTERSThe FCA reiterated that people who have already claimed do not need to act, adding that they should avoid using a claims management company or law firm.
If someone were to sign with one of these groups, who represents the driver, they could lose out on around 30 per cent of any compensation paid.
Imran Malek, corporate sales manager at DrivingExperience.com, said the car finance issues date back to deals taken out between 2007 and 2021.
He noted that despite the FCA banning the practice of hiking commissions in 2021, millions of motorists may have paid over the odds prior to the ban.
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The expert added: "This is set to be one of the biggest consumer payouts in UK history, but drivers need to be smart.
"Don't waste money on claims firms who'll take a hefty slice - the FCA has been clear that compensation will be free.
"Instead, start gathering any paperwork from old finance deals now. And while you can log a complaint with your lender today if you want to, many cases may be paused until the FCA scheme begins."
Drivers are encouraged to check their history and see if their motor finance deal was taken out between 2007 and 2021.
The car finance scandal could be worth up to £18billion
| GETTYMalek called on motorists to register with their lender if they think they could be eligible for compensation.
However, they should be aware that they may not immediately hear back from the lender, as they may be waiting for the FCA to finalise plans for a potential compensation scheme.
He added: "While most payments won't be life‑changing – usually a few hundred pounds – they're sums people are entitled to, and across millions of drivers it adds up to billions."
The expert said that motorists taking a few simple steps means they will be ready for the FCA announcement and potentially receive money back.