FCA reviews claims management amid consumer concerns

The Financial Conduct Authority's review will rigorously examine the claims management market, focusing on poor practices such as aggressive marketing, misleading advertising, and unfair exit fees.

Concerns also include consumers being signed up without clear consent or adequate explanation, and by multiple representatives, which can cause confusion and delay compensation.

While motor finance claims have brought these issues into sharper focus, the FCA is also concerned about other areas like housing disrepair.

In collaboration with the Solicitors Regulation Authority (SRA), the review will scrutinize whether consumers receive fair value, including price competition and the fitness of existing price caps.

It will also investigate financial incentives, fee structures, and funding arrangements for conflicts of interest, and assess if the full end-to-end consumer journey delivers good outcomes.

The FCA's review builds on previous interventions, including a joint taskforce announced in March to tackle poor handling of motor finance claims.

Last year, the regulator highlighted areas where firms failed to meet expectations, and poor behaviors persist.

The FCA expects full cooperation from all parties involved, warning of robust action with regulatory and enforcement partners if this is not forthcoming.

The authority will also recommend legislative changes to the Government where needed, potentially including stronger compensation mechanisms for CMCs and law firms causing harm.

Previous actions by the FCA include removing or amending 800 misleading adverts, enabling over 28,000 consumers to exit contracts free of charge, and reducing unreasonable fees for over 500,000 consumers.

Formal investigations are also underway.