FCA: Court upholds decision to name claims firm
The Financial Conduct Authority (FCA) is investigating The Claims Protection Agency Ltd (TCPA) over its motor finance work, it has emerged after a High Court battle over anonymity.
The enforcement investigation into the claims management company (CMC) follows concerns about its advertising and sales tactics in relation to potential claims, who are then referred to law firms.
In a statement, the regulator said: “The FCA is investigating what customers were told about the amount of redress they might obtain, whether they were told they could make a claim for free, and whether they were pressurised to sign up. Announcing the investigation allows TCPA customers to consider their options.
“The FCA has not reached any conclusions on whether TCPA breached any regulatory requirements.”
The company – whose 12 current and 26 former trading names include My Claim Group, Martin’s Tips, Karen’s Claims, Express PCP, and The PCP Guys – brought a judicial review to stop the FCA announcing the investigation.
In an anonymised judgment in October, Mr Justice Fordham dismissed the application and the Court of Appeal refused permission to appeal last month. This led to him releasing a second part of his ruling, naming TCPA, last week.
The FCA only names a company it is investigating if an ‘exceptional circumstances’ test is met
According to Fordham J’s second ruling, the FCA told TCPA last July that it was concerned about misleading advertisements, which suggested “average” potential refunds of £4,000.
The regulator also identified “excessive chasing of customers who had begun onboarding but not continued”, questioned whether TCPA did enough to identify and protect vulnerable customers, and highlighted “an example of a routine failure to inform customers of their free to claim alternative”.
The letter said TCPA had received warnings in the past and contravened assurances it had given.
As suggested by the FCA, TCPA made a voluntary requirements application, under which it had to stop onboarding new customers, stop publishing new financial promotions and withdraw all existing financial promotions.
However, the FCA went further and began the investigation too. Publicising this was needed to maintain public confidence in the UK financial system and protect consumers, it decided.
The internal decision, as detailed by the High Court, noted that TCPA had engaged in a “well-funded and high profile marketing campaign regarding motor finance claims through many different media, including prime-time TV, social media and adverts on public transport” – indeed, boxer Tyson Fury advertised it on social media.
The decision went on: “Given the firm’s substantial marketing budget and the number of consumers it has reached or has the potential to reach, the harm that has arisen or potential harm that could arise from any shortcomings in the conduct of the firm may be substantial.
“Identifying the firm as the subject of the investigation, and explaining the FCA’s concerns that consumers may have been misdirected by the firm as to the level of compensation they might receive in using the firm’s services, will assist the firm’s customers in deciding whether they wish to proceed with the firm and, if not, to explore their options.”
Fordham J ruled that the FCA had correctly interpreted its enforcement guide and did not act unreasonably in deciding to name TCPA.
A statement on the My Claim Group website, headlined ‘We’re Taking a Short Pause’, says: “We’re currently making updates to our advertising and sign-up processes. As part of this, and in agreement with the FCA, we have temporarily paused new customer sign-ups while these improvements take place.”
According to Companies House, Manchester-based TCPA is owned by Jonathon Howarth and John Johnstone, and is subject to two charges by Katch Fund Solutions.
We revealed last month that Katch has put its litigation fund into liquidation due to the “prolonged resolution timelines” of motor finance claims.
The action against TCPA marks an escalation in the FCA’s actions to ensure consumers know they do not need to use CMCs or law firms to bring motor finance claims.
As well as a £1m advertising campaign launched in September, in July, the FCA issued a joint statement with the Solicitors Regulation Authority warning CMCs and law firms over poor practices in motor finance claims.
In the past two years, the FCA’s work has led to the removal or amendment of more than 740 misleading adverts by CMCs.
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