In some cases, car dealers were paid higher commissions by lenders for signing motorists up for higher interest loans, a practice that has been banned since 2021.
Following the Supreme Court ruling, the FCA announced it would start consulting on setting up a compensation scheme for eligible motorists, and it expects most eligible people to get less than £950.
The consultation process will take about six weeks, and if the scheme gets approved the FCA expects to start making payments next year.
Following the FCA’s compensation announcement, the watchdog said it has received reports of scammers calling people and offering compensation that does not exist in exchange for personal details.
“We’re aware of scammers calling people and posing as car finance lenders, offering fake compensation and asking for personal details,” said Nisha Arora, director of special projects at the FCA.
“There is no compensation scheme in place yet. If anyone receives a call like this, hang up immediately and do not share any information.”
The FCA said it would never ask people for bank account PINs or passwords, and it has urged people to report any scam calls or texts to Ofcom.
A spokesperson for the watchdog said that after receiving early reports from consumers about the targeted scams it issued the warning “to get ahead of it and alert consumers quickly”.
The FCA has also previously warned motorists about signing up with claims management companies (CMCs) or firms ahead of any decision on a centralised claims scheme.
In a joint statement with the Solicitors Regulation Authority, the FCA pointed out that motorists could sacrifice up to 30% of any claims award in fees to the CMC or law firm.
The point of a centralised redress scheme would be to make it easy for consumers to get compensation, without the need for help from a CMC or law firm, the FCA said.
The final bill for the redress scheme could be as much as £18bn, with the watchdog estimating millions of people who bought new or used cars potentially dating back as far as 2007 could be eligible to make claims.
The FCA has said lenders, including major banks and specialised motor finance companies, would foot the cost.