The Financial Conduct Authority is launching a review of the
claims management market, following concerns that consumers are
being failed by some claims management companies (CMCs) and law
firms.
The review will look at the root causes of poor
practices across the market, like aggressive marketing,
misleading advertising and unfair exit
fees. Other
concerns include consumers being signed
up without their consent - without clear, upfront explanations of
the implications of signing up or ticking a box, for example on
social media adverts - or by multiple representatives,
potentially causing confusion and delaying compensation.
While the approach to motor finance claims by some CMCs and law
firms has put these issues into sharper focus, we are also
concerned about the handling of other claims, such as housing
disrepair. Last year, we set out areas where
firms were not meeting our expectations, but we and other
regulators continue to see poor behaviours.
Working in close collaboration with the Solicitors Regulation
Authority (SRA) and other regulatory partners, we will use our
review and supervisory and enforcement powers to rigorously
examine:
- Whether consumers receive fair value, including competition
on price and quality, and whether existing price caps are still
fit for purpose, especially where free-to-use redress mechanisms
exist.
- Financial incentives, including fee structures, funding and
insurance arrangements, and whether these create conflicts of
interest and/or lead to poor conduct and outcomes.
- Whether the full end-to-end consumer journey, including lead
generation, marketing and advertising, delivers good consumer
outcomes.
- Whether different approaches across different regulatory
regimes affects firm behaviour and if some firms are failing to
secure the appropriate permissions.
We will look at practices of firms we regulate, including lead
generators, as well as those authorised by others – working with
our regulatory partners.
We expect full, prompt and open cooperation from all parties we
engage in the review. We, with our regulatory and enforcement
partners, will take robust action if this is not
forthcoming.
Where we believe legislative change is needed, we will make
recommendations to Government, or relevant bodies, including
whether CMCs and law firms should be subject to stronger
compensation mechanisms if they cause harm.
Alison Walters, director of consumer finance, said:
“CMCs and law firms can help consumers secure compensation they
are owed. But too often consumers are being let down, eroding
trust in firms that should be supporting them and damaging the
economy.
“This review will give us a clear picture of how the market is
working and galvanise the further actions that are
needed.”
Aileen Armstrong, SRA executive director, strategy, innovation
and external affairs, said:
“When they work well, claims management services can benefit
consumers. But we are concerned about poor practices and
behaviours that are not looking after consumers' best
interest.
“We will work closely with the FCA on this important review. This
is a cross-sectoral problem that requires joined-up
solutions.”
We will publish further information on the review by
mid-May.
We will continue to intervene where we see harm, including
through the joint regulatory
taskforce set up to tackle the poor handling of motor
finance claims. This includes action against misleading
advertising and sign-up processes, meritless claims and multiple
representation. The taskforce will also look at firms' financial
and operational resilience including, but not limited to, the
quality and integrity of accounting and audit practices.
Notes to editors
- This is the latest measure by the regulators to improve
standards in this market. A joint taskforce was
announced in March to tackle poor handling of motor finance
claims by some claims management companies and law firms.
- The FCA has removed or amended 800 misleading adverts, in
excess of 28,000 consumers have been able to exit contracts free
of charge, and 3 CMCs reduced their unreasonable fees protecting
over 500,000 consumers. Formal investigations are also under way,
with 1 announced by the FCA.
- The SRA regulates around 9,000 law firms in England and
Wales. As of 30 April 2026, it has 109 open investigations
relating to 76 firms that manage high-volume consumer claims. It
has also closed 7 firms working in this area.
- Lead generators are firms that identify potential customers
(“leads”) and pass their details to another business, usually for
payment.
