Car finance: Advertising crackdown
Four regulators have joined forces to tackle misleading advertising and inadequate information provided by some law firms and claims management companies (CMCs) working on motor finance claims.
They are the Financial Conduct Authority (FCA), Solicitors Regulation Authority (SRA), Information Commissioner’s Office and the Advertising Standards Authority.
Using powers under the Consumer Rights Act 2015 and, for the first time, the Digital Markets, Competition and Consumers Act 2024, the FCA, working with the SRA, has required nine law firms to provide information about their exit fees.
Two FCA-regulated CMCs have also agreed to change their exit fee policies, while two more have agreed not to take on clients or to advertise until they can show the FCA they comply with its rules.
The FCA is set to write to CMCs involved in motor finance claims this week “to reiterate our expectations”.
Alison Walters, director, consumer finance, at the FCA, said: “Misleading advertising and inadequate disclosure have meant that people are signing contracts with some firms without the facts. When they try to exit, they face high fees.
“We’re acting where we see bad practice and, through our own advertising, we’re ensuring consumers can make informed choices.”
Paul Philip, chief executive of the SRA, added: “The risks and issues facing consumers in this area of the market are unprecedented, and we are using all the levers at our disposal to protect consumers, identify poor practices and hold law firms to account.”
The FCA’s said more than 740 misleading adverts by CMCs have been removed or amended since January 2024, with concerns including unrealistic claims about success rates and the value of potential compensation.
Since January 2025, the Information Commissioner’s Office has received over 230,000 complaints via its spam reporting service regarding unsolicited and unlawful direct marketing practices linked to motor finance claims.
In response, the office has multiple investigations ongoing and said it was actively considering further regulatory action against several organisations.
The Advertising Standards Authority is also reviewing practices in this sector; last month, the watchdog revealed it was investigating the advertising of group actions.
The FCA and SRA have been working closely together on motor finance. In July, they issued a joint statement warning CMCs and law firms over poor practices in claims, while last month the FCA launched a £1m campaign to tell motor finance customers that they do not need to use a CMC or law firm.
Motor finance forms part of the SRA’s increasingly extensive work on volume consumer claims.
Meanwhile, the FCA is set to launch its consultation on its motor finance redress scheme after the markets close tomorrow.
Leave a Comment