FCA launches review of claims management market

The FCA has identified several poor practices within the claims management market, including unsolicited communications, misleading social media advertisements, and unfair cancellation fees.

Consumers have also reported being signed up without consent and instances of fraudulent signatures.

In response, the FCA has already taken action, leading to the removal or amendment of over 1,000 misleading car finance claims adverts since January 2024.

Three claims management companies have reduced unreasonable fees, benefiting over half a million people, and four firms are currently restricted from taking new clients.

A joint taskforce with the Solicitors Regulation Authority (SRA), ICO, and Advertising Standards Agency has also been established to address motor finance claims.

The comprehensive market review will examine how claims firms engage with consumers, assess their value for money, and scrutinize business incentives, including opaque offshore funding structures.

It will also evaluate firms' financial resilience and the impact of regulatory differences on their behaviour.

The study will focus on claims management services for financial services and housing disrepair claims, working closely with the SRA and other regulators.

The FCA aims to create a fairer, more proportionate, and predictable redress system in collaboration with the Financial Ombudsman Service and the Government, fostering a stable environment for investment and innovation.