Claims management companies to be investigated over 'misleading ads and unfair exit fees' – here's what's happening
Claims management companies (CMCs) will be investigated by the financial regulator over "poor practices", including "misleading advertisements, aggressive marketing and unfair exit fees". The Financial Conduct Authority (FCA) will also look into whether claims firms should be subject to stronger compensation rules if they cause harm.
The review comes after the behaviour of some CMCs and law firms was brought into the spotlight by a continuing probe into car finance mis-selling. This March, the FCA launched a taskforce to specifically investigate how CMCs are handling car finance-related claims.
However, this latest review will be industry-wide (though the FCA does specifically highlight housing disrepair as an area of concern), with the FCA working alongside the Solicitors Regulation Authority (SRA).
Price caps, fee structures and how CMCs are regulated will be reviewed
Further details about the review will be confirmed by the FCA later this month, but here's what we currently know will fall within its scope:
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Price caps, which limit the amount of compensation CMCs can take after a claim has been won. The FCA will look into whether the caps – which currently range from 15% to 30% – are still suitable, especially when free redress options are also available.
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Fee structures, funding and insurance arrangements. The FCA will consider whether these are fit for purpose, and whether they "deliver good consumer outcomes".
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How claims firms are regulated. Some claims firms are regulated by the FCA, while others are regulated by the SRA. The FCA will explore whether different approaches across different regulatory regimes affects firm behaviour and whether firms "are failing to secure the appropriate permissions".
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Firms signing people up without their consent. The FCA says this includes not being given "clear, upfront explanations of the implications of signing up".
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Multiple firms representing the same individual for the same claim. This can cause confusion and delay compensation, the FCA says.
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How claims firms compensate consumers when something goes wrong. The FCA says it will look into whether firms need to follow "stronger compensation" rules if they harm consumers. Currently, if you're unhappy with how an FCA- or SRA-regulated firm you're working with has handled your complaint, you can escalate it to the Financial Ombudsman or Legal Ombudsman, which can award compensation in some cases.
Watch: Martin Lewis warns against using 'free' car finance mis-selling checks
As outlined above, one of the points the FCA will look into as part of its review concerns consumers being signed up to claims firms without their consent – for example by ticking a box without understanding the implications of doing so.
This mirrors concerns MoneySavingExpert.com (MSE) has previously raised with the FCA. In November 2025, MSE founder Martin Lewis recorded a video warning consumers about tick boxes, specifically in relation to car finance mis-selling complaints.
The FCA has since confirmed the details of its car finance mis-selling redress scheme, though this now faces legal challenges. But the core message of the video still stands, and Martin's message remains to get your complaint in now, which you can do for FREE using our DIY car finance reclaim tool.
The full transcript of what Martin says in the video
"This is an important warning about those free car finance mis-selling checks that you will see sprayed across the internet and social media. They may look like they're just an easy thing to sign up to, but beware.
"What often happens is you put your details in and there's a tick box for terms and conditions at the bottom, and some of those are not clearly telling you that if you do this, you're going to become a client – a customer of a claims management firm who could then take 30% of any future payout that you get.
"Now, the important thing to understand is the regulator, the FCA, is currently proposing a mass redress scheme, where some people will be paid out virtually automatically, without doing anything. And most people can just put in a claim with a simple letter.
"There's a free template on MoneySavingExpert.com to do it for you so you don't need to pay anyone. But you may not be aware those free checks are signing you up.
"So before you tick the box saying you accept the terms and conditions, check whether they're actually signing you up to be a customer. And if you have signed up, and it's in the last 14 days, you're within the cooling-off period and can cancel."
Claims ads featuring Martin Lewis banned in April
Just last month one claims firm's adverts were BANNED after it used unauthorised clips of Martin to make misleading claims about car finance compensation. The action taken by the financial regulator came after we'd reported the ads in February.
The advertisements also used the FCA logo without authorisation from the regulator and made misleading claims about the level of compensation due. Martin reacted to the announcement about the ban on X, saying he was "delighted" to see the regulator take action against the firm.
Additional reporting by the Press Association (PA).
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