FCA and SRA joint message to professional representatives on motor finance commission claims: dealing with multiple representation and excessive termination fees
AI Analysis
The FCA and SRA have issued a joint warning to claims management companies (CMCs) and law firms handling motor finance commission claims, addressing multiple client representations (up to 4 per claim observed) and excessive termination fees, which risk unfair consumer treatment. This matters because regulators are intensifying scrutiny amid a paused complaints-handling period (ending May 2026) and a forthcoming redress scheme, with enforcement actions already underway against non-compliant firms.
Key dates
- 7 October 2025
- - FCA letter to CMCs on related expectations
- Early 2026
- - FCA expected to finalize redress scheme rules (per consultation responses). (https://www.akingump.com/en/insights/alerts/fca-consultation-paper-on-motor-finance-redress-published)
- 31 January 2026
- - Snapshot of SRA's 89 open HVCC investigations and 7 firm closures
- 5 February 2026
- - FCA launches consumer advertising campaign warning of scammers (post-dated relative to publication)
- End of March 2026
- - FCA to publish final rules on proposed Motor Finance Consumer Redress Scheme (CRS)
- May 2026 Deadline
- - Current pause on motor finance commission complaints handling ends; non-CRS complaints must progress per DISP timelines
Suggested considerations
- Engaging clients and other representatives to confirm client wishes and establish single representative.
- Notifying respondent firms promptly of the sole representative.
- Supporting file transfers with client consent and considering no-charge resolutions if onboarding was poor.
- Robust onboarding checks (e.g., confirm no prior representation).
- Entering new agreements only after prior termination and informed consent.
- Written confirmation of instructions to client, respondent, and prior representative.
What changed
This is a non-binding joint message reinforcing existing obligations under FCA's Consumer Duty, Claims Management Conduct of Business Sourcebook, Consumer Rights Act 2015 (CRA), and SRA standards, rather than introducing new rules. Key emphases include mandatory robust onboarding due diligence to prevent multiple representations, clear upfront disclosure of termination fees, and justification of any fees charged (especially if onboarding was inadequate). Regulators highlight potential CRA unfairness in fee structures (e.g., charging both termination and success fees) and commit to joint enforcement using CRA powers, with ongoing monitoring and investigations.
Compliance impact
Urgency: High - Immediate risk of enforcement; FCA/SRA using CRA/DMCA 2024 powers (e.g., info requests from 9 law firms), 5 CMCs paused onboarding, 1 under investigation, SRA closed 7 firms. Matters due to paused complaints (ending soon), impending CRS, consumer harm from fees/delays, and proactive monitoring signaling broader crackdown on HVCC misconduct like excessive fees or poor due diligence.
Who is affected
Related regulations
References
AI-generated analysis. May contain errors or omissions — verify with the original FCA source before acting. Full disclaimer.
What the FCA said
The FCA and Solicitors Regulation Authority (SRA) are warning claims management companies and law firms (representatives) involved in motor finance claims to make sure clients don’t have multiple representatives for the same claim and are not charged excessive termination fees We have seen some clients with up to 4…
Extract from FCA . Read the full notice at the source for the authoritative text.