Last month the Financial Conduct Authority (FCA) launched a £1 million campaign, letting motor finance customers know they do not need to use a claims management company (CMC) or law firm to access an industry-wide compensation scheme the regulator is proposing.
I wrote back in February 2022 that the FCA were contributing to the “No Win, No Fee” compensation culture by creating headline grabbing messages about their finance discretionary commission model review. Headlines such as “We estimate this could be costing consumers £300 million annually.” giving claims management companies and law firms a perfect opportunity to encourage consumers to start compensation claims.
Whilst it is a positive move by the FCA, it does feel like “after the horse has bolted”. As part of the campaign, which will feature radio and online advertising, the FCA is teaming up with influencers, to get the message to consumers. Whilst I have not seen any evidence of this advertising, it would appear the annoying adverts about making a motor finance claim seem to have disappeared.
New research commissioned by the FCA shows that 79% of motor finance customers are aware that they may be owed compensation and 61% of a possible compensation scheme.
However, 41% of those aware they may be owed compensation didn’t know they would not need to use a CMC or law firm if a redress scheme is introduced. Using a CMC or law firm to make a motor finance claim could cost consumers around 30% of any compensation paid.
Of motor finance holders aware of the possibility of being owed compensation, 25% have already made a claim and a further 39% intend to. Among those who have already made a claim, just under half (46%) did so using a CMC or law firm.
Over the next 2 months, a number of influencers will be posting information for consumers on their social media channels, including Instagram and TikTok. Online video and radio ads will launch in October.
The FCA plans to launch their consultation on the compensation scheme in early October. If the compensation scheme goes ahead, the first payments should be made in 2026. If you are still receiving any correspondence from these claims management companies or law firms, please let Lawgistics know.
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