The Solicitors Regulation Authority (SRA) and Financial Conduct Authority (FCA) are reminding claims management companies (CMCs) and law firms involved in motor finance commission claims that they are expected to have stringent checks in place to ensure that a consumer has not instructed another representative for the same issue.
If a consumer wishes to terminate an agreement or switch representative, firms must not charge unfair fees. Any fees charged must be reasonable and reflect the work carried out. Fees charged by FCA-regulated CMCs must be fair in line with the consumer duty. Following a review by the FCA, two FCA-regulated CMCs have agreed to change their termination policies.
The FCA has made it very clear that, before starting a case, CMCs are expected to confirm that a customer has not already instructed another representative. Sarah Rapson, Chief Executive of the SRA, has stated that “protecting consumers is our priority”. “We expect firms we regulate to abide by the SRAs clear standards and regulations.” The FCA and SRA will continue to monitor the conduct of CMCs and law firms where poor practices are identified.
The FCA has increased its monitoring of financial promotions that had led to the removal of more than 800 misleading adverts by FCA-regulated CMCs since January 2024. The FCA recently opened an investigation into a CMC following concerns about its advertising and sales tactics in relation to potential motor finance commission claims.
The FCA is due to launch an advertising campaign to warn consumers about scammers pretending to be car finance lenders and falsely claiming that people are owed compensation, despite there being no such scheme in place.
SRA guidance on claims management activity: the SRA has updated its guidance in relation to claims management activity. Certain events, such as Payment Protection Insurance (PPI) or the Citroën airbag safety recall, have resulted in a high number of consumers being entitled to redress, which can lead to a high volume of claims in a short period of time. All firms should undertake claims management activity efficiently and at a fair and reasonable cost. Firms must act in their client’s best interests and must not take unfair advantage of third parties.
In the case of Citroën, the company issued an urgent stop-drive recall in 2025 for approximately 160,000 vehicles linked to unsafe airbags. CMCs acting for consumers were looking to seek compensation for loss of use, alternative transport costs and depreciation. Many dealers were overwhelmed, as repairs were prolonged and caused significant inconvenience.
The Supreme Court decision in Johnson v FirstRand Bank Limited & Others of 1 August 2025 decided that, in certain specific circumstances, motor finance companies may have entered into unfair relationships with consumers, meaning that the commission will be repayable. It also decided that car dealers did not have to prioritise consumers’ interests over their own. On this basis, some motor finance consumers with commission disclosure claims will not be entitled to compensation.
On 7 October 2025, the FCA published its consultation on an industry-wide scheme to compensate motor finance consumers who were treated unfairly between 2007 and 2024. The consultation has now closed. The FCA expects to publish final rules on the redress scheme in 2026.
The SRA has noted that all firms must familiarise themselves with the judgement in the Johnson case and consider its impact on existing and prospective clients. Firms should inform clients of the realistic prospects of an FCA-led redress scheme being introduced. The SRA has also stated that firms that use CMCs for motor finance referrals must comply with FCA regulations.
On average 55 vulnerabilities are identified daily.
What can I do?
Review your organisations priorities and ask ‘can we afford a breach?’. What do I do during an incident? Who do I involve? When do I involve the ICO?
If you’re unable to answers these questions, you need help from the experts.
If you have had the same issue, or are unsure where you stand on a potential motor finance commission claim, why not call our legal team at Lawgistics. Our telephone helpline and casework service can help you understand your options and the likely next steps.
