Claims management companies (CMCs) and claimant law firms (CLFs) are an important part of access to justice, often providing a voice for consumers who may not have the resources or confidence to pursue complaints themselves. However, recent mass redress events including motor finance commission and PPI have highlighted some instances of substandard practices by some CMCs and CLFs, which pose a risk to both consumers and firms and, as the FCA notes, can undermine trust in the system more generally. A rising number of consumers looking to make a car finance compensation claim has brought these practices under intense scrutiny.
On 6 May 2026, the FCA launched a review of the claims management market, working closely with the SRA and other regulators, to examine the causes of poor practice, identify areas for reform, and use its supervisory and enforcement powers where necessary. The review forms part of a broader, co-ordinated regulatory effort to raise standards. This briefing considers the FCA’s review into how firms handle a mis-sold car finance claim.
What is the FCA going to review?
The FCA’s review will focus on the underlying causes of poor consumer outcomes received from some CMCs. This appears to be through a Consumer Duty lens (to which CMCs are subject) and consistent with issues we identified at the time of Consumer Duty implementation (as discussed in our 2022 podcast).
In particular, the FCA will consider misleading and aggressive advertising. They will also review unfair termination fees regarding a car finance compensation claim.
Additional areas of concern include where consumers are signed up without informed consent for a mis-sold PCP agreement. This often happens via unclear online prompts, such as social media adverts. The FCA is also concerned where multiple professional representatives are instructed, creating confusion and delaying compensation.
Other key aspects of the review include:
Fair value: competition, price/quality and whether current price caps remain appropriate, particularly given free-to-use redress routes for a PCP car claim
Financial incentives: fee structures, funding and insurance arrangements, and related conflicts of interest for any car finance claims in the UK
Consumer journey: end-to-end experience, including lead generation, marketing and advertising; and
Regulatory behaviour: differences across regimes, including firms operating without appropriate permissions.
Where legislative change is needed, the FCA will make recommendations to Government and relevant bodies, including on strengthening compensation mechanisms for harm caused by CMCs and CLFs.
What are other regulators doing?
The FCA has framed this as a co-ordinated regulatory effort. In particular, it is working with the Advertising Standards Authority (ASA), the Solicitors Regulation Authority (SRA) and the Information Commissioner’s Office (ICO) to share intelligence and take targeted action where poor practice is identified, alongside parallel action already taken within each regulator’s remit. Notably, the regulatory partners also announced a joint taskforce in March 2026. This taskforce aims to tackle very similar issues in motor finance claims, helping consumers safely navigate a PCP car finance claim.
Next steps
The FCA is expected to provide a further update in mid-May. CMCs and law firms should continue to expect increasing co-ordination between regulators regarding their activities and potential intervention where the FCA find failings. There is also potential for further regulatory reform in particular areas such as fees, advertising, disclosures to customers and conduct. Over the longer term, the review may lead to recommendations for legislative change to protect those submitting a car finance compensation claim.
Comment
The FCA and the SRA are focused on dealing with poor CMC/CLF conduct. Ensuring the right framework emerges from the review, backed by effective supervision and enforcement will be critical.
Alongside this review, reforms to the Financial Ombudsman Service (see our briefing) will also play an important role in ensuring a system that supports legitimate claims, while filtering out bogus or poorly evidenced complaints. The overall objective must be a regime in which CMCs and CLFs can continue to operate effectively, but where claims are properly founded, consumers are fully informed and the process delivers fair and efficient outcomes for all parties.
