Regulators warn claims firms and solicitors to prevent duplicate claims and unfair termination fees
The Financial Conduct Authority and the Solicitors Regulation Authority have issued a joint warning to claims management companies and law firms involved in motor finance commission claims, reminding firms of their obligations to protect consumers from duplicate representation and unfair charges.
In a statement published on 4 February 2026, the regulators said firms must ensure that consumers are not represented by more than one organisation for the same claim and are not subjected to excessive or unclear termination fees. The warning applies to both FCA-regulated claims management companies (CMCs) and SRA-regulated law firms operating in this area.
The regulators said firms are expected to have robust checks in place before taking on a claim to confirm that a consumer has not already instructed another representative. Where a consumer chooses to switch representatives or terminate an agreement, firms must do so without charging unfair fees. Any fee applied must be reasonable and reflect the work actually carried out.
The FCA has also written to motor finance lenders to outline steps they can take to address issues arising from multiple representation. Under the Consumer Duty, fees charged by FCA-regulated CMCs must provide fair value. Following scrutiny by the FCA, two regulated CMCs have agreed to amend their termination fee policies, a move the regulator said would protect around 70,000 consumers from excessive charges.
Law firms regulated by the SRA are similarly required to act in their clients’ best interests. The regulator said firms can only bill in accordance with the agreement the client entered into before work began, and any termination fee must have been clearly set out in advance. Where duplicate claims arise, firms are expected to resolve matters through efficient and cost-effective co-operation.
Sheree Howard said firms should confirm that a customer has not already instructed another representative before starting work. She added that where a consumer signed up without fully understanding the agreement, the FCA would not expect a termination fee to be charged. Any fee applied, she said, must be reasonable and proportionate to the work done.
Sarah Rapson said that with potentially millions of claims in this area, consumer protection remains the priority. She warned firms that the SRA expects strict compliance with its standards and regulations, including where clients choose to terminate agreements or have signed up to multiple firms.
The regulators said they will continue to monitor conduct in the sector and take action where poor practices are identified. They highlighted that weak onboarding checks, insufficient consumer information and misleading advertising have contributed to multiple representation.
The FCA confirmed that increased monitoring of financial promotions has resulted in more than 800 misleading adverts being removed or amended since January 2024. An investigation has also been opened into a CMC over concerns about its advertising and sales practices relating to motor finance commission claims.