FCA and SRA Warn Car Finance Claims Firms Over Fees
Financial regulators issue joint warning to claims companies and law firms about excessive termination fees and multiple representation in motor finance commission claims. Two firms have already agreed to change policies protecting 70,000 consumers.
The Financial Conduct Authority and Solicitors Regulation Authority have issued a joint warning to claims management companies and law firms handling motor finance commission claims, telling them to stop charging consumers excessive termination fees and ensure customers don't have multiple representatives for the same claim.
The FCA says it has already secured changes from two regulated claims management companies, protecting 70,000 consumers from excessive charges. The regulators are demanding firms carry out robust checks to confirm consumers haven't already instructed another representative before taking on cases.
Sheree Howard, executive director of authorisations at the FCA, said firms should confirm customers haven't already instructed another representative before starting any case. "Where someone signed up without fully understanding what they were agreeing to, we wouldn't expect a termination fee to be charged," she stated.
The FCA has removed or amended more than 800 misleading adverts by regulated claims management companies since January 2024 and recently opened an investigation into one firm over concerns about its advertising and sales tactics. The authority will launch an advertising campaign on 5 February warning consumers about scammers pretending to be car finance lenders.
Consumers don't need to use a claims management company or law firm to claim compensation and could lose a significant chunk of money owed if they do. Those who believe they've been unfairly charged should first complain to the firm, then take complaints to the Claims Management Ombudsman or Legal Ombudsman if dissatisfied with the response.
