The Financial Conduct Authority (FCA) has said it is working with three other regulators to tackle poor practices in the handling of motor finance commission claims, as the Finance & Leasing Association (FLA) called for earlier intervention against claims management companies and claimant law firms.
Speaking at Credit Week, Alison Walters, the FCA’s director of consumer finance, said the regulator had formed a joint taskforce with the Solicitors Regulation Authority (SRA), Information Commissioner’s Office (ICO) and Advertising Standards Authority (ASA) to address misconduct linked to motor finance claims.
She said: “We are taking coordinated action to address poor practices in the handling of motor finance claims by some claims management companies and law firms.”
Walters added: “By bringing together different regulators, we are tackling misconduct more effectively and seeking to reduce harm to consumers.”
The comments came as the FLA urged the FCA not to wait until its claims management market study concludes in 2027 before taking action where there is already evidence of consumer and market harm.
FLA calls for earlier intervention
The trade body welcomed the FCA’s review of the claims management market but said poor practices by some claims management companies, claimant law firms and lead generators are already creating confusion for consumers, increasing costs, delaying redress and placing unnecessary pressure on businesses.
It warned that businesses are diverting increasing levels of resource into handling poor-quality, duplicate and speculative claims, reducing their ability to support customers and investment.
Shanika Amarasekara, chief executive of the FLA, said the regulator should not wait until the review concludes before addressing areas where there is already clear evidence of consumer and market harm.
She said: “Consumers should not face unnecessary delays, confusion or costs because of poor practices in the claims management market.
“Nor should businesses be forced to devote ever-increasing resources to tackling low-quality, duplicative or speculative claims.”
Focus shifts beyond lenders
The latest comments suggest regulatory attention is increasingly turning towards the conduct of some claims management companies and law firms, as well as the wider motor finance commission issue.
Walters also said the FCA is working with the Financial Ombudsman Service and HM Treasury to modernise the UK’s redress system following lessons learned from previous mass compensation events.
She said there was “a renewed focus on confidence and trust in financial services, not least through the lessons learnt from mass redress events”.
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