The Financial Conduct Authority (FCA) and the Solicitors Regulation Authority (SRA) issued a joint warning to claims management companies (CMCs) and law firms involved in motor finance commission claims, focusing on cases where consumers end up with more than one representative and face high or unfair fees when trying to switch or terminate agreements. The regulators expect robust checks to confirm a consumer has not already instructed another representative, and require any cancellation or termination charges to be fair, reasonable and proportionate to work actually done. The FCA has also written to lenders on potential actions they should take to address the issue. For FCA-regulated CMCs, fees must provide fair value under the Consumer Duty and, following FCA scrutiny, two CMCs agreed to change their termination fee policies, which the FCA said will protect 70,000 consumers from excessive charges. For SRA-regulated law firms, clients must be billed in line with the agreement in place before work started and any termination fee must have been clearly stated up front, with duplicate claims resolved through efficient and cost-effective co-operation. The release also points to wider supervisory and enforcement activity, including the removal or amendment of more than 800 misleading adverts by FCA-regulated CMCs since January 2024, an FCA investigation into a CMC’s advertising and sales tactics, and information requirements imposed on nine law firms about exit fees using powers under the Consumer Rights Act 2015 and, for the first time, the Digital Markets, Competition and Consumers Act 2024. The FCA and SRA said they will continue to monitor conduct and take action where poor practices are identified. The FCA also said it will launch an advertising campaign on 5 February warning consumers about scammers posing as car finance lenders and claiming compensation is due, noting there is no motor finance compensation scheme in place yet and referencing a proposed motor finance redress scheme.
Financial Conduct Authority 2026-02-04
Financial Conduct Authority and Solicitors Regulation Authority warn motor finance claims firms to prevent multiple representation and excessive termination fees
The Financial Conduct Authority (FCA) and the Solicitors Regulation Authority (SRA) warned claims management companies and law firms in motor finance commission claims to ensure fair fees and prevent multiple representations. The FCA has enforced changes to termination fee policies and addressed misleading advertising, and plans an advertising campaign to warn consumers about motor finance compensation scams.