Financial experts are warning that drivers will not receive as much compensation as first thought, as Britain's highest court prepares to deliver its decision tomorrow on the car finance commission scandal.

The Supreme Court's decision follows October's explosive Court of Appeal ruling that sided with consumers who argued they were misled by concealed commission payments between lenders and car dealerships.

Financial analysts and legal specialists increasingly believe the judges will moderate the lower court's findings, potentially saving banks billions of pounds.

The October verdict sent shockwaves through Britain's financial system, opening the door for millions of motorists to seek compensation for hidden charges embedded in their vehicle financing agreements.

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Financial institutions are breathing easier as market forecasters slash their compensation projections ahead of tomorrow's ruling.

RBC Capital Markets analyst Benjamin Toms has reduced his estimate by 30 per cent, now projecting total costs of £11billion for both traditional banks and other lenders.

He told the Financial Times that his figure sits "well below consensus expectations".

Jefferies banking analyst Jonathan Pierce has similarly revised downwards, suggesting Lloyds Banking Group's exposure through its Black Horse division could be limited to £2billion maximum, rather than the £4billion previously feared.

PA | The Supreme Court is expected to deliver a verdict on the car finance scandal soon

"There has been a shift downwards in consensus estimates of redress costs for banks by about 20 per cent," Toms confirmed.

HSBC's earlier projection of £44billion in total industry costs, including £10billion in administrative expenses, has been withdrawn after the analyst responsible departed the bank.

Oxford University commercial law professor Julius Grower anticipates the Supreme Court will "lay down some very clear guidelines" restricting potential claims both within vehicle financing and across other industries.

Consumer protection agencies have issued stark warnings about predatory practices in the claims industry as millions prepare to seek compensation.

The Solicitors Regulation Authority revealed it is examining 73 law firms for potential rule violations regarding high-volume claims.

SRA chief executive Paul Philip said: "Where we find cases where firms are not acting in the best interest of their clients, we will investigate and take action."

The Financial Conduct Authority forced amendments or withdrawals of 224 car loan compensation advertisements over the past year.

Both regulators cautioned that claims management companies and law firms may charge up to 30 per cent of any compensation awarded, with some imposing hourly rates of £175 for clients who withdraw from proceedings.

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Reports have suggested that Chancellor Rachel Reeves could intervene in the car finance scandal

The FCA has indicated it will likely establish a free redress scheme for consumers following the Supreme Court's decision, urging claimants to consider this option before engaging fee-charging firms.

The Government is reportedly weighing legislative intervention to contain the financial impact, whilst the banking sector prepares for what remains a multi-billion pound reckoning despite the anticipated judicial moderation.

A Treasury spokesperson said it does not comment on speculation and would let the appeals process run its course.

It added: "We want to see a balanced judgment that delivers compensation proportionate to losses that consumers have suffered and allows the motor finance sector to continue supporting millions of motorists to own vehicles."