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FCA announces a review of claims management practices

May 8, 2026 | FCA

Link(s):  FCA to review claims management practices | FCA

Context

In what might be seen as an unusually strong approach, the FCA is launching a review of the claims management market, following concerns that consumers are being failed by some claims management companies (CMCs) and law firms.  This is the latest measure by the regulators to improve standards in this market. A joint taskforce was announced in March to tackle poor handling of motor finance claims by some CMCs and law firms. 

Background

  • The FCA has removed or amended 800 misleading adverts, more than 28,000 consumers have been able to exit contracts free of charge, and three CMCs reduced their unreasonable fees, protecting over 500,000 consumers. Formal investigations are also underway, with one announced by the FCA.
  • The Solicitors Regulation Authority (SRA) regulates around 9,000 law firms in England and Wales. As of 30th April 2026, it has 109 open investigations relating to 76 firms that manage high-volume consumer claims. It has also closed seven firms working in this area.

Key points to note and next actions

  • The review will look at the root causes of poor practices across the market, like aggressive marketing, misleading advertising and unfair exit fees.
  • Other concerns include consumers being signed up without their consent (without clear, upfront explanations of the implications of signing up or ticking a box, for example on social media adverts) or by multiple representatives, potentially causing confusion and delaying compensation.
  • Working in close collaboration with the SRA and other regulatory partners, the FCA will “rigorously examine”:  
    • Whether consumers receive fair value, including competition on price and quality, and whether existing price caps are still fit for purpose, especially where free-to-use redress mechanisms exist.
    • Financial incentives, including fee structures, funding and insurance arrangements, and whether these create conflicts of interest and/or lead to poor conduct and outcomes.
    • Whether the full end-to-end consumer journey, including lead generation, marketing and advertising, delivers good consumer outcomes.
    • Whether different approaches across different regulatory regimes affects firm behaviour and if some firms are failing to secure the appropriate permissions.  
  • The FCA will look at practices of firms it regulates, including lead generators, as well as those authorised by others – working with its regulatory partners.  
  • The FCA expects “…full, prompt and open cooperation from all parties we engage in the review”.  The FCA has said that it will take robust action if this is not forthcoming.  
  • Where it believes legislative change is needed, the FCA will make recommendations to Government, or relevant bodies, including whether CMCs and law firms should be subject to stronger compensation mechanisms if they cause harm.