The Financial Conduct Authority (FCA) has been issued a critical warning just days after confirming "millions" of petrol, diesel and electric customers will receive compensation. Experts have stressed the FCA needs to ensure lenders stick to the deal and "not delay" in paying motorists.

Tom Jervis, Consumer Reporter at Auto Express stressed a swift payout was vital to "repair consumer trust" which had been affected by the ongoing scandal.

Speaking exclusively to Express.co.uk, Tom said: "What matters now are two things: delivery and the repair of consumer trust. The FCA must ensure that lenders do not delay in distributing the necessary redress so that customer perception of the car finance industry can heal - critical given how most cars purchased nowadays are done so on finance."

The FCA stressed that the motor finance market has continued to attract investment and still functions well since a compensation scheme was confirmed. However, they accepted that the scheme would have a market effect, with a limited impact on the new car finance market expected.

The FCA has already issued a message to lenders, encouraging them to sort out compensation sooner rather than later.

The FCA said: "We expect everyone to get behind the scheme, and lenders to put things right promptly for their customers. We need to draw a line under the past and support a healthy motor finance market for the future."

A total of 12 million car finance agreements are eligible for compensation, with motorists expected to receive an average of £829 in payouts. Insurers are expected to have to pay out a total of £9.1 billion, down from the previous estimate of £11billion.

The FCA stressed that the "final approach is fair for consumers and proportionate for firms."

Tom told Express.co.uk: "At its core, this is about people who may have paid more than they should have without fully understanding why. Despite this, lenders have argued that previous compensation scheme proposals were too generous.

"The finalised proposal appears to make some concessions on behalf of consumers in order to not damage the industry beyond repair, but ultimately feels like a balanced and fair outcome."