Financial Regulators Unite to Combat Misleading Motor Finance Claims Practices

The Financial Conduct Authority is working with three other regulators to tackle poor handling of motor finance commission claims by some firms targeting Kent drivers.

Drivers across Kent who’ve been targeted by aggressive marketing for motor finance claims could soon see better protection, as financial regulators join forces to crack down on misleading practices.

The Financial Conduct Authority announced it’s working alongside the Solicitors Regulation Authority, Information Commissioner’s Office and Advertising Standards Authority to tackle poor handling of motor finance claims by some claims management companies and law firms.

The Scale of the Problem

The numbers paint a concerning picture. Since January 2024, over 800 misleading adverts by FCA-regulated claims management companies have been removed or amended following regulatory intervention.

Five CMCs have faced direct action – two were forced to reduce their exit fees, while four had to stop taking on new clients entirely. The FCA has also opened an enforcement investigation into The Claims Protection Agency Limited over concerns about their advertising and sales tactics, including promises of free claims and pressure tactics to get people to sign up.

What Went Wrong

The crackdown comes as the motor finance sector faces scrutiny over undisclosed commissions between lenders and brokers. The FCA paused handling of motor finance complaints in January 2024 to properly assess the situation, with that pause set to lift on 31 May 2026.

But some claims management companies appear to have exploited the uncertainty. The joint warning from the FCA and SRA emphasises that high-volume motor finance commission claims must not dilute solicitors’ professional obligations.

Claims management companies can take over 30% of any compensation awarded – a significant chunk that could otherwise go directly to affected consumers.

The Road Ahead

A consumer redress scheme is in the works. The FCA consulted on proposals last October, with final rules expected by late March 2026 after markets close on 30 March. There’ll then be a three-month implementation period before the scheme launches.

Firms must retain records until 11 April 2031, helping ensure transparency for consumers pursuing claims. According to the FCA, this approach prioritises consumer protection by streamlining redress and ensuring timely payouts without indefinite complaint delays.

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Key Takeaways

• Four major regulators are working together to tackle misleading motor finance claims practices
• Over 800 misleading adverts have been removed since January 2024, with five CMCs facing direct action
• A consumer redress scheme looks set to launch by summer 2026 following final rules in March

What This Means for Kent Residents

Kent drivers with motor finance agreements affected by undisclosed commissions should consider complaining directly to their lenders rather than using claims management companies, which can charge fees up to 30% of any compensation. Local residents can seek free support from Kent Trading Standards or Citizens Advice Kent when dealing with potentially mis-sold finance claims. With complaints set to be processed after 31 May 2026, there’s time to properly research options and avoid unnecessary fees that could considerably reduce any redress received.