UK regulator launches review of ‘aggressive’ claims management firms amid compensation concerns

The City regulator has launched a review of claims management companies amid concerns that firms are misleading victims of financial scandals, such as car finance, about their compensation. The Financial Conduct Authority (FCA) said some companies were pursuing “aggressive marketing, misleading advertising and unfair exit fees”. Some consumers are also being signed up without their permission or by multiple companies, the FCA said, which could delay compensation they are owed. The regulatory scrutiny comes as claims management companies (CMCs) target victims of the car finance scandal, where they can charge fees worth up to 33% of the final payouts. The FCA and lenders have warned against consumers using these firms, as the regulator’s scheme is free to use. Millions of people are expected to receive payouts this year over the motor finance scandal , in which drivers were overcharged for loans as a result of commission payments between lenders and car dealers between 2007 and 2024. However, the FCA added that it was concerned about the handling of other claims by CMCs, such as housing disrepair. Alison Walters, the director of consumer finance at the FCA, said: “CMCs and law firms can help consumers secure compensation they are owed. But too often consumers are being let down, eroding trust in firms that should be supporting them and damaging the economy. …