U.K. Regulator FCA Reviews Claims Management Firms Over Compensation Practices

The U.K.’s Financial Conduct Authority (FCA) has launched a review of claims management companies over concerns related to marketing practices, advertising, and consumer sign-ups linked to compensation claims.

The regulator said some firms were using misleading advertisements, charging exit fees, and enrolling consumers without consent. It added that multiple firms were sometimes registering claims for the same consumer, potentially delaying compensation payments. The review will focus on companies handling claims linked to the motor finance issue, where borrowers were overcharged on vehicle loans due to commission arrangements between lenders and car dealers from 2007 to 2024. Claims management firms can charge fees of up to 33% of payouts, although the FCA has advised consumers that its compensation process is free.

The FCA said regulators had already removed or amended 800 advertisements and enabled more than 28,000 consumers to leave contracts without charges. The Solicitors Regulation Authority has also opened investigations into dozens of law firms handling consumer claims.