Car finance compensation green light

The UK's major lenders have dropped their opposition to a massive car finance compensation scheme, clearing the way for potential payouts to millions of consumers.

Santander, Barclays, and Lloyds Banking Group agreed to the Financial Conduct Authority's framework after a landmark ruling regarding hidden commissions in motor finance deals.

Analysts estimate that the total compensation bill for the industry could reach £9 billion, significantly impacting bank earnings over the next two years.

The scheme will address deals made between 2007 and 2021 where discretionary commission arrangements were used without proper disclosure to customers.