In light of the ruling, Lloyds Banking Group has suspended commission payments for new loans and allocated £450 million for potential payouts, with analysts predicting total liabilities could soar to between £2.5 billion and £3.9 billion.

Other major banks, including Santander UK and Barclays, are also reevaluating their financial strategies, with Santander potentially facing a liability of £1.1 billion.

Consumers who financed vehicles during the affected period may be eligible for compensation, particularly if DCAs were involved, with average payouts expected to exceed £1,000.

Given that approximately 80% to 90% of new cars in the UK are financed, millions of consumers could qualify for compensation related to loans issued between April 6, 2007, and January 28, 2021.

The FCA is contemplating a compensation scheme that may begin disbursing payments in 2026, although a comprehensive ruling on the broader implications of the case is not anticipated until late 2025.

A recent court of appeal ruling declared it unlawful for lenders Close Brothers and FirstRand Bank to pay undisclosed commissions to car dealers without informing borrowers.

This ruling follows the ban on discretionary commission arrangements (DCAs) by the FCA in 2021, aimed at curbing inflated interest rates charged to consumers.

Estimates suggest that the potential compensation scheme could reach between £8 billion and £13 billion, reflecting the extensive impact of the ruling.

The FCA's investigation into DCAs may have far-reaching consequences for lenders, extending beyond the current scope of the inquiry.

To ensure informed consent for loans, consumers must be made aware of all material facts affecting their borrowing decisions, including commission details.

UK lenders are expressing concerns about the financial ramifications of the ruling, as evidenced by Close Brothers halting new car loans and experiencing a 37% drop in their shares.

Compensation claims can be facilitated by claims management firms, and some individuals have already received payouts through the Financial Ombudsman Service or court rulings.