FCA and SRA Issue Joint Warning Over Motor Finance Claims and Excessive Fees

The UK Financial Conduct Authority (FCA) and the Solicitors Regulation Authority (SRA) have issued a joint warning to claims management companies (CMCs) and law firms handling motor finance commission claims, instructing them to cease unfair fee practices and prevent duplicate client representations. The regulatory bodies emphasized that representatives must conduct rigorous onboarding checks to ensure consumers have not already engaged another representative for the same claim. The FCA has also communicated with motor finance lenders regarding actions needed to address duplicate representations across the sector. According to the regulators, consumers wishing to switch representatives or cancel their agreements must not face unfair or excessive termination fees. Under the FCA's Consumer Duty and SRA professional standards, any exit fees charged must be transparent, reasonable, itemized, and directly reflective of actual work performed. Following FCA intervention, two regulated CMCs have altered their termination fee structures, protecting approximately 70,000 consumers from disproportionate charges. Regulators highlighted that poor onboarding procedures, deficient client due diligence, and misleading marketing have fueled multiple representation issues. Since January 2024, proactive monitoring by the FCA has resulted in the removal or modification of more than 800 misleading advertisements published by CMCs. The FCA has also launched a formal investigation into a CMC concerning its promotional and sales tactics. The FCA utilized its regulatory powers under the Consumer Rights Act 2015 and the Digital Markets, Competition and Consumers Act 2024 to require nine law firms to submit information regarding their exit fee structures, sharing findings with the SRA. Meanwhile, the SRA reported that as of January 2026, it had 89 active investigations into 71 law firms engaged in high-volume consumer claims and had closed down seven firms operating in this area. Ahead of a proposed motor finance redress scheme, the FCA is rolling out a public campaign to warn consumers against scams and misleading claims promises, reminding the public that using a CMC or law firm is not required to seek compensation.