UK regulators have shut down some claims companies and ordered others to stop taking on clients as they intensify a crackdown on firms making misleading statements about car finance compensation. Four regulators have joined forces to tackle poor practices among claims management companies (CMCs) and consumer law firms seeking a share of billions in compensation for victims of the car finance commission scandal.
The Financial Conduct Authority (FCA) is due to announce more details of a planned official compensation scheme on Tuesday, which should mean payouts begin next year. Millions of people are in line for compensation after a Supreme Court ruling in August, which could result in up to £18bn being paid out for car loans dating back to 2007.
CMCs and law firms have been ramping up efforts to encourage people to sign up, but the FCA and the Solicitors Regulation Authority (SRA) are concerned that some firms are not informing consumers about free alternatives, making misleading claims about payouts, and charging fees of up to 30% of any compensation. They have now joined forces with the Information Commissioner’s Office and the Advertising Standards Authority on a crackdown.
The SRA said it was investigating 76 law firms and had closed five to protect the public. Two FCA-regulated CMCs have agreed to change their policies on exit fees, and two other firms have agreed not to take on clients or advertise until they comply with FCA rules. The FCA said its increased monitoring had led to more than 740 misleading adverts being changed or pulled since January 2024.
The FCA recently launched a £1m advertising campaign to make people aware they do not need to use a CMC or law firm to get compensation. Paul Philip, chief executive of the SRA, said: “We are using all the levers at our disposal to protect consumers, identify poor practices and hold law firms to account.”
