The UK's Financial Conduct Authority has warned consumers that pursuing court claims for mis-sold car finance could exclude them from a £9.1bn industry redress scheme. FCA chief Nikhil Rathi said customers taking cases to court would be barred from accessing the free scheme launched this week, which covers 12.1 million car loans.

The controversy stems from undisclosed commissions paid by lenders to dealerships, which courts ruled often led to higher interest rates for consumers. While the FCA estimates average payouts of £829 per claim, claims management companies believe they can secure higher awards of about £1,500 through litigation.

Rathi dismissed these expectations as unrealistic, noting the scheme would cost banks less than £4bn in operational expenses compared to individual litigation. The FCA has already taken action against several claims management firms, requiring some to stop regulated activities. Banks are considering legal challenges that could delay payouts by at least a year.