Barclays has launched a legal challenge over a ruling that it unfairly paid commission to a car finance broker.
Thousands of drivers could be entitled to payments over fear that motorists paid billions of pounds more than necessary to dealers and brokers for mis-sold car finance.
Consumer experts have said the total compensation bill could be similar to the PPI scandal.
In around 40pc of cases, regulator Financial Conduct Authority (FCA) found the interest rate on car finance deals was at the whim of the dealership. Between 80pc and 90pc of new cars have been bought using car finance in recent years, including personal contract purchase (PCP) and hire purchase.
The case of Miss L, was highlighted by the FCA alongside one other involving Lloyds Banking Group, when it announced a probe into mis-selling in January.
She was not aware that the loan agreement involved a £1,600 commission to be paid by Barclays Partner Finance to a credit broker when she took out a loan to buy a car in 2018, the Financial Ombudsman Service (FOS) found.
The second landmark case, which paved the way for thousands of new claims to be heard going back to 2007, was against Black Horse, a subsection of Lloyds Banking Group, and heard that Mrs Y, who took out a hire purchase agreement, was charged 5.5pc interest, but could have paid just 2.49pc.
A Lloyds Banking Group spokesman confirmed to the Telegraph that it is reviewing its own case against the FOS.
Car dealers, who act as brokers for lenders, were pressured to apply higher rates to drivers in return for larger commission payments, it is alleged.
The so-called discretionary commission arrangements were banned by the city regulator in 2021, and in January it announced that it would launch a probe into commission arrangements dating back to 2007.
While the regulator did not name and shame the individual firms it would be examining, it did engage leading accountancy firm EY to carry out what is known as a “skilled person’s review” into the problem. A decision on whether to approve mass payouts is due in September.
