The Financial Conduct Authority (FCA) and the Solicitors Regulation Authority (SRA) issued a joint warning on 4th February 2026 directed at claims management companies (CMCs) and law firms handling motor finance commission claims. The warning focuses on two specific problems: consumers being signed up to multiple representatives for the same claim, and firms charging excessive termination fees when clients attempt to switch or withdraw.
Multiple Representation
The FCA and SRA have identified cases where a single consumer has been signed up to as many as four different representatives for the same claim. The regulators attribute this to poor onboarding and due diligence, misleading advertising, and contracts that claim to supersede earlier instructions without evidence of adequate pre-contract checks.
The joint statement sets out the following expectations for firms that discover a client already has another representative:
- Inform the client immediately and explain the implications of multiple representations, including any termination fees that may apply.
- Advise the client of all options and provide the information needed to support an informed decision.
- Keep a written record of all discussions with the client.
- Support file transfer, with the client’s consent, if the client chooses to proceed with another representative.
The regulators state that multiple agreements for the same claim generally indicate poor onboarding and that the appropriate remedy is often to put the client back in the position they would have been in had proper due diligence been carried out. In some cases, this may mean terminating a contract without charging any fee.
Excessive Termination Fees
The joint statement identifies excessive termination fees as a concern both in multiple representation cases and in routine terminations, including where clients wish to opt in to the proposed FCA redress scheme themselves.
For SRA-regulated firms, the regulators identify the following as behaviours that would concern the SRA:
- Charging clients for work that has not been done or is not chargeable
- Undertaking unnecessary work to increase fees
- Charging more than the fee cap permitted under the SRA’s Claims Management Fee Rules.
- Charging fees that exceed a reasonable amount given the services provided.
- Charging excessive hourly rates or imposing higher-grade fee earner charges unnecessarily.
The FCA used its Consumer Rights Act 2015 powers to obtain and review contracts from a sample of SRA-regulated representatives. That review found wide fee variation, with some structures lacking transparency and some terms that could be disproportionately high, including clauses allowing firms to charge both a termination fee and the full success fee if the claim later succeeds.
Sarah Rapson, Chief Executive of the SRA, said:
“With potentially millions of claims in this area, protecting consumers is our priority. We expect firms we regulate to abide by the SRA’s clear standards and regulations. You must act in the best interest of your clients, including those who may choose to terminate their agreement or who may have signed up to multiple firms. Firms operating here should be under no illusion as to the requirements. We have reminded them of their responsibilities on a number of occasions, including in a recent Warning Notice and in our updated claims management guidance. We will continue to engage with firms in this area and take action where required”.
Enforcement And Wider Context
As of 31st January 2026, the SRA had 89 open investigations relating to 71 law firms operating in the high-volume consumer claims sector. The SRA has also closed seven firms working in this area. As of 4th February 2026, two FCA-regulated CMCs had agreed to change their termination fee policies, protecting 70,000 consumers from excessive charges. The FCA has also opened an enforcement investigation into one CMC following concerns about its advertising and sales tactics.
The 4th February 2026 warning is the latest in a series of joint regulatory interventions. The SRA and FCA issued a joint warning in July 2025 ahead of the Supreme Court’s judgment. The Supreme Court handed down its judgment on 1st August 2025 on the issue of undisclosed motor finance commissions.
Update (30 March 2026):
Finance Redress Scheme
The FCA has now confirmed its final motor finance redress scheme and has confirmed the pause on motor finance complaint handling will lift on 31st May 2026. The scheme will consider compensating motor finance agreements taken out between 6th April 2007 and 1st November 2024 where commission was payable by the lender to the broker. Firms are expected to pay out around £7.5 billion in redress, with 12.1 million agreements now eligible for compensation. Millions of consumers will be compensated this year, with most of the rest by the end of 2027.
Joint Regulatory Taskforce
Alongside the confirmation of the redress scheme, on 30th March 2026, the FCA, SRA, Information Commissioner’s Office (ICO) and Advertising Standards Authority (ASA) announced a new joint taskforce to tackle poor handling of motor finance claims by some CMCs and law firms. The taskforce will step up efforts to share intelligence and take co-ordinated action to address unsolicited and misleading advertising, meritless claims, multiple representation, and unfair exit fees. Consumers are reminded that the FCA’s motor finance redress scheme will be free to use and they do not need to use a CMC or a law firm; those who do may lose up to 30% of any compensation received.
Final Words
The FCA and SRA have confirmed they will continue to monitor the conduct of CMCs and law firms in this area and will take action where poor practices are identified. The SRA has directed firms to its updated Claims Management Activity guidance on its high-volume consumer claims web page.
We have been helping solicitors and other legal professionals with disciplinary and regulatory advice for 30 years. If you have any questions relating to an SRA investigation or an SDT appearance, please call us on 0151 909 2380 or complete our Free Online Enquiry