The UK Financial Conduct Authority (FCA) has published a statement announcing it is launching a review of the claims management market, prompted by concerns that some claims management companies (CMCs) and law firms are delivering poor consumer outcomes. The review will examine the root causes of poor practices across the market, including aggressive marketing, misleading advertising, unfair exit fees, and instances where consumers are being signed up without their consent or by multiple firms, leading to confusion and delaying compensation. While these issues in relation to motor finance claims have been brought into sharper focus, the FCA has also noted concerns about the handling of other claims.
Working with the Solicitors Regulation Authority and other regulatory partners, the FCA will examine: (i) whether consumers receive fair value, and whether existing price caps are still fit for purpose; (ii) financial incentives and whether these create potential conflicts of interest; and (iii) review whether the full end-to-end consumer journey, including lead generation, marketing and advertising, delivers good consumer outcomes. The review will also consider whether different approaches across different regulatory regimes affect firm behaviour and if some firms are failing to secure the appropriate permissions. The FCA expects full and open cooperation from all firms in the review and indicates that it, together with its regulatory and enforcement partners, may take robust action where this is not the case. It will also make recommendations to the government for any potential legislative reform, including whether CMCs and law firms should be subject to stronger compensation mechanisms if they cause harm.
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