In July 2025, the Solicitors Regulation Authority (SRA) and the Financial Conduct Authority (FCA) issued a joint warning to law firms and claims management companies (CMCs) concerning practices in motor finance commission claims. The regulators expressed concern over misleading marketing, lack of transparency, and failure to inform consumers about free alternatives to pursuing claims.

Key Points from the Warning

• Transparency Obligations: Law firms and CMCs must clearly inform clients about the existence of potential redress schemes and the possibility of pursuing claims independently without incurring fees.
• Fair and Reasonable Fees: Any fees charged must be justifiable, reflecting the actual work undertaken, and clients should be made aware of their right to exit agreements without penalty.
• Accurate Marketing: Advertising materials should not be misleading or speculative regarding the likelihood of success or potential compensation amounts.

Implications for Legal Professionals

Legal professionals must adhere to these guidelines to maintain ethical standards and avoid regulatory scrutiny. Failure to comply could result in investigations and potential disciplinary actions.

Consumer Guidance

Consumers are advised to be cautious of unsolicited offers from CMCs or law firms and to consider pursuing claims directly through official channels to avoid unnecessary fees.