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More than one million South African drivers face the possibility of missing out on compensation related to the car finance scandal, according to a warning from law firm Slater and Gordon. The firm’s analysis indicates that approximately 1.1 million low-value car finance agreements will not be eligible for redress under the currently proposed compensation scheme.

The scandal stems from widespread mis-selling of car finance products, where customers were charged excessive commission fees without their knowledge or consent. A review, led by retired judge Elizabeth Maggs, uncovered widespread failings in the way car finance agreements were sold, impacting a significant number of consumers.

Slater and Gordon’s assessment focuses on the eligibility criteria for the compensation scheme. The current framework excludes agreements below a certain value, effectively barring a substantial portion of affected drivers from receiving compensation. This exclusion is based on a cost-benefit analysis, where the administrative costs of processing smaller claims are deemed disproportionate to the potential payouts.

“While the proposed scheme represents a step towards addressing the historical failings in the car finance industry, the exclusion of low-value agreements is a significant concern,” stated a spokesperson for Slater and Gordon. “Many individuals with smaller finance agreements have still been impacted by the mis-selling practices and deserve to have their claims considered.”

The firm is urging regulators and policymakers to reconsider the eligibility threshold and explore alternative mechanisms to ensure that all affected drivers, regardless of the value of their finance agreement, have access to compensation. The ongoing debate highlights the complexities of delivering redress on a large scale and the need to balance fairness with practical considerations. The details of the compensation scheme are still being finalised, and further updates are expected in the coming weeks.