Howard: Clear about our expectations
The Solicitors Regulation Authority (SRA) and Financial Conduct Authority (FCA) have joined forces to warn about multiple representation and excessive termination fees in motor finance claims.
They have told law firms and claims management companies (CMCs) about the need for “robust checks” to confirm consumers have not already instructed another representative and that any fees charged to a consumer who wants to switch representatives or terminate their retainer must be reasonable and reflect the work done.
The FCA has also written to lenders setting out the potential actions they should take if they come across multiple representation.
Tomorrow, meanwhile, it is launching an advertising campaign to warn consumers about scammers pretending to be car finance lenders and falsely claiming that people are owed compensation, despite there being no compensation scheme in place yet.
In their joint message [1], the regulators said they have seen some clients with up to four different representatives for the same claim. They risk being charged termination fees when cancelling duplicate agreements.
They said poor onboarding and due diligence practices, lack of information to consumers and misleading advertising have contributed to multiple representation.
The warning reminds law firms that they can only bill in line with the agreement the client signed up to before work started and any termination fee must have been clearly stated up-front, while fees charged by CMCs must provide fair value in line with the Consumer Duty.
Where a representative believed a termination fee was reasonable, “they should keep a clear record of how the termination fee has been calculated and may be required to provide evidence of this”.
Also, if the representative believed the claim was unlikely to succeed at the time of termination, and the client has not been updated about the change in prospects, “it may not be fair to charge any termination fee at all”.
The FCA said two CMCs it regulated have recently agreed to change their termination fee policies, “protecting 70,000 consumers from excessive charges”.
SRA chief executive Sarah Rapson said: “With potentially millions of claims in this area, protecting consumers is our priority. We expect firms we regulate to abide by the SRA’s clear standards and regulations.
“You must act in the best interest of your clients, including those who may choose to terminate their agreement or who may have signed up to multiple firms.
“Firms operating here should be under no illusion as to the requirements. We have reminded them of their responsibilities on a number of occasions, including in a recent warning notice [2] and in our updated claims management guidance. We will continue to engage with firms in this area and take action where required.”
Sheree Howard, the FCA’s executive director of authorisations, added: “We’ve been clear about our expectations of CMCs. Before starting any case, firms should confirm a customer hasn’t already instructed another representative.
“Where someone signed up without fully understanding what they were agreeing to, we wouldn’t expect a termination fee to be charged. If any fee is applied, it must be reasonable, and reflect the work done.”
At 31 January 2026, the SRA had 89 open investigations relating to 71 law firms that manage high-volume consumer claims. It has also closed seven firms working in the area.
The FCA, meanwhile, has had over 800 misleading adverts removed or withdrawn, while four CMCs have agreed to stop onboarding clients until they are able to show they comply with FCA rules.
The FCA has also opened an enforcement investigation [3] against The Claims Protection Agency over its motor finance work.
Last July, the two regulators issued a joint warning [4] about the conduct of motor finance claims ahead of the Hopcraft Supreme Court ruling, and then in October teamed up with the Advertising Standards Authority and Information Commissioner’s Office to address misleading advertising [5] and inadequate information.
We will be discussing motor finance claims and the regulation of claims work at our Claims Futures conference [6] on 21 October in Manchester.