The Financial Conduct Authority has joined forces with the Solicitors Regulation Authority (SRA), Information Commissioner’s Office (ICO) and Advertising Standards Authority (ASA) to address poor practices among some claims management companies (CMCs) and law firms involved in motor finance claims.
The joint initiative is targeting misleading advertising, inadequate disclosure of key information, and the risk of excessive exit fees being charged to consumers.
Using powers under the Consumer Rights Act 2015 and, for the first time, under the Digital Markets, Competition and Consumers Act 2024, the initiative has required nine law firms to provide information about their exit fees. Two regulated CMCs have agreed to change their policies, while two others have agreed to suspend client activity and advertising until they can demonstrate compliance with regulatory requirements.
Since January 2024, increased proactive monitoring has led to the removal or amendment of more than 740 misleading adverts by regulated CMCs, with concerns including unrealistic claims about success rates and potential compensation amounts.
The FCA has also launched a £1 million public awareness campaign to highlight that consumers can pursue motor finance compensation directly, without using a CMC or law firm - and that doing so could prevent unnecessary deductions from any redress received.
The SRA is investigating 76 law firms involved in high-volume claims and has already closed five firms to protect the public. The ICO has received over 230,000 complaints since January 2025 relating to unlawful direct marketing linked to motor finance claims, with multiple investigations now under way. The ASA is also reviewing advertising standards across the sector.
Consumers who believe they have been misled, charged unreasonable fees, or subjected to unlawful marketing are encouraged to first complain directly to the firm involved. If unresolved, complaints can be escalated to the Claims Management Ombudsman or Legal Ombudsman.
To support the public, the SRA has also published guidance on motor finance claims, and on no-win, no-fee agreements.
Individuals concerned about direct marketing practices or those wishing to make a complaint, are encouraged to do so via the ICO website. They can also report spam text messages to the ICO by forwarding the message for free to 7726).
The FCA has published its consultation paper relating to the motor finance redress scheme that follows August’s Supreme Court ruling. The consultation will run until 18 November with an expectation that the scheme will be operational early next year.
