Car finance payout chaos could see 1.1 million drivers risk losing out on compensation

More than one million drivers could miss out on compensation from the car finance scandal, fresh data has warned.Law firm Slater and Gordon has stated that 1.1 million low-value car finance agreements will not be eligible for compensation through the proposed scheme.The Financial Conduct Authority outlined its proposals for a redress scheme earlier this year following a high-profile consultation for drivers and lenders.It stated that 12.1 million agreements would be eligible for compensation after the mis-selling scheme, with an average payout of £829 per agreement for drivers. TRENDING Stories Videos Your Say The £9.1billion scheme was designed to ensure motorists receive compensation after being mis-sold car finance, and protect banks and major lenders from collapsing.However, fresh analysis from Slater and Gordon warns that more than one in 12 impacted drivers could miss out on compensation.It states that car finance deals involving smaller commission amounts, namely £120 or less for agreements before April 1, 2014, and £150 or less for agreements after that date, are considered to be fair.As a result, these commission payouts are not eligible for compensation under the final rules of the scheme, the law firm noted.When outlining the redress scheme, the FCA said low commission amounts were unlikely to have influenced a decision made by the consumer.Slater and Gordon state that the majority of cases where smaller amounts were borrowed were used to buy less expensive cars or vans.It suggested that customers who were more financially stretched could be unfairly penalised by the FCA's redress scheme.Elizabeth Comley, the law firm's chief operating officer, lamented the small print of the redress scheme.LATEST DEVELOPMENTSFerrari unveils first electric car with 329-mile battery range and huge £475,000 price tagMotorhome and campervan owners targeted as staycation surge puts pressure on seaside townsM27: Drivers face 50mph speed limits and overnight closures until June as major roadworks continueShe said: The people being cut out of this scheme are those at the lower end of the market - drivers who borrowed smaller amounts to buy cheaper cars and who can least afford to lose out.You don't see high-income consumers taking out £2,000 car finance agreements. These are people stretching to afford a vehicle, and they are now being told they don't qualify for compensation.The FCA will face legal challenges over the compensation scheme, including from Consumer Voice, represented by Courmacs Legal Ltd, Volkswagen Financial Services, Mercedes-Benz Financial Services, and Crédit Agricole Auto Finance.Consumer Voice argues that millions of drivers risk being undercompensated after they were mis-sold car finance, as well as 4.7 million agreements that are not included at all.It states that it is mounting a legal challenge to calculate compensation amounts fairly and reflect what people actually lost.A spokesperson for the FCA said: Our scheme is fair and proportionate and would put £7.5billion back into people’s pockets.Very low levels of commission are unlikely to have influenced the consumer's decision or the broker's behaviour – so it's right they aren't considered for compensation. Our Standards: The GB News Editorial Charter