The City regulator is facing a battle with claims companies over a £1m advertising campaign designed to discourage drivers from using their services to get payouts over the car loan scandal.

The Financial Conduct Authority (FCA) announced this month that it would roll out a series of online and radio adverts, telling drivers they will not need to use claims management companies (CMCs) or law firms to apply for their share of the regulator’s proposed £18bn compensation scheme.

The scheme is meant to compensate millions of drivers who were overcharged as a result of controversial commission arrangements between lenders and car dealers. It follows a supreme court ruling in August, which upheld one of three consumer complaints over commission.

The regulator has hired online influencers including Cameron “Cazza” Smith to tell consumers they will be able to apply for free, and should not sign up to claims companies that take up to 30% of payouts in fees.

However, claims firms are accusing the FCA of caving to big banks – which are trying to reduce their compensation bill – and ultimately pushing consumers towards accepting “low-ball” payouts.

The FCA has said borrowers should expect no more than £950 for each complaint through its scheme.

“We have consistently called for a redress scheme that is fair, transparent, and puts consumers first,” said Darren Smith, the managing director of Courmacs Legal, a Blackburn-based law firm that says it is handling 4m car finance claims.

“Instead, the FCA appear to be prioritising the interests of big banks by pressuring victims to accept low-ball offers through their redress scheme that may not reflect the full extent of the harm they have suffered. Motorists should have a choice to engage lawyers, especially if they might get a significantly higher payout through the courts.”

Lizzy Comley, the chief operating officer of the claims law firm Slater and Gordon, said she was “concerned the FCA’s campaign risks undermining the important role law firms play in protecting the rights of consumers”, particularly vulnerable borrowers who may have trouble lodging complaints themselves.

When asked whether it was considering taking any legal action over the advertising campaign, another firm, Bott and Co, said: “We are currently reviewing the content of the campaign to ensure its message is fair and balanced and accurately reflects the complexities involved. All options remain under review to protect the integrity of our profession.”

CMCs and law firms have been in a long-running battle with the banking industry, having gained a reputation as ambulance chasers before hitting their stride after the payment protection insurance (PPI) mis-selling scandal. High street banks alleged that CMCs had fuelled a claims culture in Britain, filing reams of spurious claims and taking advantage of consumers who could easily have filed complaints on their own.

The City watchdog raised concerns this summer about “troubling” practices by some claims firms, saying their marketing – which have flooded social media – risked misleading consumers over the motor finance scandal, and even leaving them out of pocket.

But Bobby Dean, a Liberal Democrat MP and member of the Treasury committee, said he was worried that the FCA’s advertising campaign risked tarnishing all claims companies with the same brush. “Let’s not forget that, without the work of some credible law firms, much of the unfair practices that consumers will be due compensation for would never have been uncovered,” he said.

An FCA spokesperson said: “Only around half of consumers know they don’t need to use a CMC or law firm to claim. It’s important they’re equipped to make a choice and to understand that they could lose some of their compensation. That’s what our consumer campaign aims to do. Get people the facts so they can make their choice.”

Lenders have made provisions to cover the costs of potential compensation. Lloyds, the largest provider of motor loans through its Black Horse division, has already put aside a total of £1.2bn for potential compensation, while Santander UK has allocated £295m.

The specialist lender Close Brothers has so far put aside £165m, while FirstRand, which owns the UK car lender MotoNovo, has taken a £122m charge. The financial arm of BMW has put aside £200m to date.