Overview

The Financial Conduct Authority (FCA) has launched a major review into the claims management market after identifying widespread poor practices among some claims management companies (CMCs) and law firms. The regulator is concerned that consumers are being misled, overcharged, or signed up without proper consent, particularly in areas such as motor finance claims and housing disrepair.

The FCA will work closely with the Solicitors Regulation Authority (SRA) and other regulators to raise standards, strengthen oversight, and take enforcement action where necessary.

Key Issues Identified

• Aggressive or misleading advertising, especially online and via social media.
• Unclear or non‑consensual sign‑ups, including consumers being signed up by multiple representatives.
• Unfair or opaque fee structures, including exit fees.
• Poor-quality case handling that delays or reduces compensation.
• Potential regulatory gaps, including firms operating without correct permissions.

What the FCA Will Examine

The review will focus on four core areas:

1. Fair value for consumers
   Whether fees, price caps and service quality deliver genuine value — especially where free redress routes exist.

2. Financial incentives and conflicts of interest
   How fee models, funding arrangements and insurance structures influence firm behaviour.

3. End‑to‑end consumer journey
   From lead generation and advertising to onboarding, case handling and outcomes.

4. Regulatory alignment
   Whether differences between regulatory regimes are driving poor behaviour or enabling firms to avoid proper oversight.

Regulatory Action Already Taken

• 800 misleading adverts removed or amended.
• 28,000+ consumers allowed to exit contracts free of charge.
• Three CMCs reduced unreasonable fees, protecting 500,000+ consumers.
• 109 open SRA investigations into high‑volume claims firms; 7 firms closed.
• Joint FCA–SRA taskforce targeting misleading advertising, meritless claims, and multiple representation.

What Happens Next

• The FCA will publish further details by mid‑May 2026.
• Firms are expected to provide full, prompt and open cooperation.
• Enforcement action will follow where harm is identified.
• The FCA may recommend legislative changes, including stronger compensation mechanisms for consumers harmed by CMCs or law firms.

FAQ

What is the FCA reviewing?

The FCA is reviewing how CMCs and law firms advertise, sign up clients, charge fees and handle claims — to ensure consumers receive fair value and clear information.

Why is this happening now?

Regulators have seen rising complaints about misleading advertising, unfair fees and poor-quality claims handling, particularly in motor finance and housing disrepair.

Does this affect all CMCs and law firms?

No. Many firms operate responsibly. The review targets poor practices and aims to raise standards across the sector.

Will consumers benefit?

Yes. The review aims to ensure clearer information, fairer pricing, better-quality services and stronger protection from misleading or aggressive practices.

What should firms do now?

Firms should review their marketing, onboarding, fee structures and permissions to ensure they meet FCA and SRA expectations — and cooperate fully with the review.