The scheme, announced last night by the FCA, proposes a £9.1 billion redress plan with average driver payouts of £829.
This follows last year’s Supreme Court ruling brought before the courts by HD Law.
Kevin Durkin, the solicitor who uncovered the national mis-selling scandal and director of HD Law, accused the regulator of ‘systematically lowballing’ the public to protect bank liquidity.
Mr Durkin said: “The FCA has chipped away so much at the Supreme Court’s judgment to the extent that rather than this being a haircut it has become a number two crew cut.
“Any suggestion that the average top award has increased to £829 is like putting lipstick on a pig, when considering the numerous concessions the FCA have made on the scheme in favour of the lenders.”
The FCA’s average payout is less than half of the £1,800 typically secured through HD Law using the court system.
Mr Durkin argued that the revised scheme prioritises lender interests over consumers.
He said: “By comparison, the FCA’s new 39 per cent threshold feels like a calculation designed to cap the banks’ liability rather than return what is legally owed to the consumer.
“For many, convenience is going to cost them over £1,000 in lost compensation.”
In response, HD Law has provided an emergency Consumer Guide to ensure drivers aren’t “short-changed” by the automated scheme.
The guide urges drivers to compare potential payouts and seek professional advice.
Mr Durkin warns that drivers should not simply accept the FCA’s figures without question.
He said: “The FCA’s top level average is now £829.
“The Supreme Court decision suggests where there is an unfair relationship, the correct analysis should be reference to the amount of the undisclosed commission.
“The FCA rules are a significant departure from this to the detriment of the consumer and the financial benefit of the lender.”
The guide also highlights complexities around deals agreed before April 2014 and the dangers of signing away rights through a “full and final” settlement.
It advises against relying solely on the FCA scheme without understanding the potential loss in value.
Mr Durkin said: “A specialist law firm doesn’t just fill in a form; they litigate for the return of ALL hidden commission plus interest.”
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“75 per cent of a £2,000 award is better than 100 per cent of an £800 settlement.
“Quite simply, they do all the leg work and handle the ‘nasty’ letters from your lender on your behalf.”
Drivers are urged to carefully check agreements and seek legal advice before accepting any offers of compensation.