New taskforce aims to address misleading claims and protect motor finance consumers
A coalition of UK regulators has launched a joint taskforce to address concerns over poor practices in motor finance claims, targeting both claims management companies (CMCs) and law firms.
The initiative brings together the Financial Conduct Authority (FCA), the Solicitors Regulation Authority (SRA), the Information Commissioner’s Office (ICO), and the Advertising Standards Authority (ASA). It aims to strengthen oversight and improve consumer protection as the FCA prepares to introduce a motor finance redress scheme.
The taskforce will focus on tackling a range of issues identified across the sector. These include misleading and unsolicited advertising, the pursuit of meritless claims, multiple representation of clients, and the use of unfair exit fees. Regulators have committed to sharing intelligence and taking coordinated enforcement action using their full regulatory powers.
Alison Walters, director of consumer finance at the FCA and lead for the taskforce, said the scheme would be free for consumers and would not require the involvement of a CMC or law firm. She emphasised that where consumers choose to seek representation, they should be able to rely on firms acting in their best interests.
Deb Jones, the SRA’s executive director of transformation and taskforce lead, said the initiative is intended to improve public confidence in the system. She highlighted the importance of ensuring consumers understand the standards they can expect from legal service providers and claims companies.
The ASA has also indicated it will take proactive action against misleading promotions related to motor finance claims. Its director of complaints and investigations, Miles Lockwood, said advertising must clearly set out the costs and commitments involved in engaging professional representation.
Meanwhile, the ICO has warned firms against unlawful direct marketing practices. Andy Curry, head of investigations, reiterated that organisations must not send unsolicited communications without consent and confirmed that enforcement action will follow where breaches occur.
Regulators have also issued guidance to consumers. The FCA confirmed that individuals will be able to access the redress scheme without charge, and warned that using a CMC or law firm could result in fees of up to 30% of any compensation awarded. Consumers are advised not to engage multiple representatives, as this may lead to additional costs.
The announcement follows earlier regulatory action in the sector. The FCA has already required changes to hundreds of adverts, enabled thousands of consumers to exit contracts without charge, and secured fee reductions from several firms.
The SRA continues to monitor the sector, with dozens of ongoing investigations into firms handling high volumes of consumer claims.
The taskforce represents a coordinated effort by regulators to address risks in the market and ensure that consumers are treated fairly in the handling of motor finance claims.