Millions of drivers could still be in line to receive compensation from the car finance scandal despite a damning Supreme Court ruling last week.
The Financial Conduct Authority (FCA) has outlined that it will set out an industry-wide compensation scheme.
The regulator said it wanted to set up a proposed compensation scheme because it wants to provide "clarity and certainty" to customers.
As part of the consultation, the FCA will look to "ensure the integrity" of the motor finance market, as well as working on other ways to focus on fairness and timeliness.
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|Drivers could receive up to £950 in compensation from the car finance scandal
The FCA estimates that the total level of compensation will not be lower than £9billion, and could be as high as £18billion, although it will likely be between the two thresholds.
It also estimates that most people will "probably receive less than £950" in compensation per agreement.
This is slightly lower than the £1,100 outlined under initial projections, with some experts claiming the scandal could cost as much as £44billion.
Commenting on the consultation, Nikhil Rathi, chief executive of the FCA, said it was "clear" that some motor finance companies have broken the law and the regulator's rules.
SUPREME COURT |
Lord Reed delivered the Supreme Court's car finance verdict last week
He added: "It's fair for their customers to be compensated. We also want to ensure that the market, relied on by millions each year, can continue to work well, and consumers can get a fair deal.
"Our aim is a compensation scheme that’s fair and easy to participate in, so there's no need to use a claims management company or law firm. If you do, it will cost you a significant chunk of any money you get."
Rathi clarified that it would take time to establish the consultation, but drivers could start to receive compensation "next year".
The consultation will launch in early October, with the FCA telling motorists that they do not need to do anything if they have already complained.
Reiterating previous arguments, the FCA said consumers did not need to use a claims management company or law firm, as they could lose up to 30 per cent of any compensation.
The Supreme Court ruled in favour of lenders that they are not liable for hidden commission payments in car finance schemes.
Handing down the ruling, Lord Reed, President of the Supreme Court, said the court would allow the appeals brought forward by the finance companies.
Of the three rulings, the Supreme Court only awarded compensation to one of the consumers, claiming that the Court of Appeal "made a number of mistakes".
PA | Martin Lewis has helped motorists with the car finance scandal
Reacting to the FCA's announcement of a consultation on a compensation scheme, Martin Lewis took to social media to alert drivers to the changes.
He outlined that it could apply to up to 14 million people and they could receive in the "high hundreds, but not thousands of pounds".
The money saving expert continued, saying: "Well, the industry could fight this and it could fight it hard. Now, I would urge people in the industry this is a fair compromise. You're going to be paying out far less than you would have done had the Supreme Court upheld what the Court of Appeal said.
"And actually, what we need now is we need consistency, we need transparency, and we need speed, both for the industry and for individuals to get through this."