SRA issues warnings over conduct of volume consumer claims


Philip: Obligations are very clear

Law firms handling bulk financial product mis-selling claims have been warned about their conduct of cases by the Solicitors Regulation Authority (SRA).

The regulator said it was “particularly concerned” about firms taking proper instructions from clients and supervising staff when part of high-volume processes.

It has published a warning notice on high-volume financial services claims, together with guidance on the broader issue of claims management activity.

The SRA said the move followed discussions with the Financial Conduct Authority (FCA) and the Financial Ombudsman Scheme (FOS) amid the possibility of a surge in new claims around car finance mis-selling.

The warning notice said: “We have identified specific risks for consumers when they engage with solicitors and law firms about claims relating to financial services or products.

“We are concerned that these risks are increasing due to patterns of behaviour some law firms have shown and demonstrated in their commercial practices.”

These included consumers reporting they did not consent to a law firm starting to act for them, poor due diligence during client onboarding “that leads to low quality and/or inaccurate claims entering the financial service redress system”, and failures to” act promptly or adequately in response to client instructions”, including where clients want to terminate their retainer.

“We are particularly concerned about operational approaches for undertaking financial services claims management activity as part of high-volume/bulk claim processes that involve multiple clients.”

The guidance cites supervision as an issue, saying “good-quality systems may support – but are not a replacement for – adequate supervision and direction of case handlers”.

It also looks at other issues, such as working with third parties, levels of charge, and specific issues, including the need to explain to clients the nature of after-the-event (ATE) insurance.

The latter is a concern of the SRA’s in the wake of SSB Law’s collapse and ATE insurers refusing to pay out on claims.

“You should make sure each client understands the terms and limitations of ATE insurance that they are reliant on. This is irrespective of whether you make arrangements to secure ATE cover on their behalf, or if the client themselves secures the cover as part of their claim…

“You should consider whether it is appropriate to routinely require the purchase of ATE insurance for all claims upon initial instruction.”

The guidance has a strong emphasis on the need to focus on the needs of individual claimants, as well as the growing use of subject access requests (SARs).

“A SAR might reveal a client has, or had, multiple financial services provided by, or products held with, a defendant, in addition to the financial service or product that you are advising the client about.

“You must have clear instructions and authority from the client before progressing any claims related to additional products.”

The new materials draw together and replace previous SRA guidance and warnings on mis-sold payment protection insurance, holiday sickness and personal injury.

SRA chief executive Paul Philip said: “As demonstrated by the various warning notices we have issued in past years, how mass claims are handled is a topic which regularly causes us, and other others such as the FCA concern.

“Whichever mass claims area they are working in, solicitors’ obligations are very clear. We expect the profession to treat clients as individuals, not just a number within a group.

“This means, for example, communicating with them clearly, giving them a proper assessment of their specific case and related decisions to be made, and asking them for consent before taking any actions in their name – basically, making sure they adhere to their overall obligation to act in their clients’ interests at all times.”

We are releasing a recorded webinar, Motor Finance Mis-selling Explained, on 31 May. 

Our inaugural Claims Futures conference on 12 November will consider the regulatory and other issues involved in volume consumer claims.




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