Regulators target bad practice in motor finance claims
A number of regulatory bodies are working together to tackle high fees charged by claims management companies dealing with motor finance claims.
The Financial Conduct Authority (FCA), Solicitors Regulation Authority (SRA), Information Commissioner’s Office (ICO) and the Advertising Standards Authority (ASA) have announced they are working together to clamp down on improper practices by claims management companies and law firms handling motor finance claims.
The ICO has received more than 230,000 customer complaints linked to motor finance claims since January.
The FCA now launched a £1m campaign to make people aware they don’t need to use a claims management company or law firm to seek motor finance compensation.
Bad practice
Alison Walters, director, consumer finance, at the FCA, said: “Misleading advertising and inadequate disclosure have meant that people are signing contracts with some firms without the facts.
“When they try to exit, they face high fees. We’re acting where we see bad practice and, through our own advertising, we’re ensuring consumers can make informed choices.”
Paul Philip, chief executive of the SRA, added: “The risks and issues facing consumers in this area of the market are unprecedented, and we are using all the levers at our disposal to protect consumers, identify poor practices and hold law firms to account.”
Action
The FCA has already required nine law firms to provide information about their exit fees, while two claims management companies have agreed to change their exit fee policies and two others have agreed not to take on clients or to advertise until they’re able to show the FCA they comply with FCA rules.
Meanwhile, the SRA is investigating 76 law firms involved in high-volume claims.
