News
Regulators join forces to protect motor finance customers from bad practices
Words by: Andrew Woodhouse
Published on 30 March 2026 | 0 min read
A new joint taskforce led by the Financial Conduct Authority (FCA), alongside the Solicitors Regulation Authority (SRA), Information Commissioner’s Office (ICO), and Advertising Standards Authority (ASA), is cracking down on poor practices in motor finance claims.
As regulators prepare to introduce a compensation scheme for affected customers, they are also warning consumers how to protect themselves and avoid unnecessary costs or scams. Here are the key things you need to know:
As regulators prepare to introduce a compensation scheme for affected customers, they are also warning consumers how to protect themselves and avoid unnecessary costs or scams. Here are the key things you need to know:
1. You don’t need to pay to make a claim
The FCA’s upcoming motor finance redress scheme will be completely free to use.
You do not need to hire a claims management company (CMC) or a law firm to receive compensation. If you choose to use one, you could lose up to 30% of your payout in fees. Going through the courts is another option, but may end up costing you more overall. Alison Walters, director of consumer finance at the Financial Conduct Authority and taskforce lead, said: “Our scheme will be free and people don’t need to use a CMC or law firm. Should they decide to do so, it’s important that they can trust CMCs and law firms to act in their best interests. This taskforce will ensure we deal with problems quickly and decisively.”
You do not need to hire a claims management company (CMC) or a law firm to receive compensation. If you choose to use one, you could lose up to 30% of your payout in fees. Going through the courts is another option, but may end up costing you more overall. Alison Walters, director of consumer finance at the Financial Conduct Authority and taskforce lead, said: “Our scheme will be free and people don’t need to use a CMC or law firm. Should they decide to do so, it’s important that they can trust CMCs and law firms to act in their best interests. This taskforce will ensure we deal with problems quickly and decisively.”
2. Avoid signing up with multiple firms
It might be tempting to explore different options, but signing agreements with more than one CMC or law firm can backfire.
You could end up being charged multiple fees for the same claim, reducing any compensation you receive. Deb Jones, executive director of transformation at the Solicitors Regulation Authority, said: “We want consumers to have confidence in the system. The taskforce is a great example of how we as regulators can use our collective expertise and powers to not only take action, but also to improve consumers’ awareness of the standards they can expect from law firms and CMCs.”
You could end up being charged multiple fees for the same claim, reducing any compensation you receive. Deb Jones, executive director of transformation at the Solicitors Regulation Authority, said: “We want consumers to have confidence in the system. The taskforce is a great example of how we as regulators can use our collective expertise and powers to not only take action, but also to improve consumers’ awareness of the standards they can expect from law firms and CMCs.”
3. Watch out for scams
Be cautious if you’re contacted out of the blue about motor finance compensation.
Scammers may reach out via: • Cold calls • Text messages • Emails They may claim you’re owed money or offer to check your eligibility. Treat these approaches with suspicion and avoid sharing personal details.
Scammers may reach out via: • Cold calls • Text messages • Emails They may claim you’re owed money or offer to check your eligibility. Treat these approaches with suspicion and avoid sharing personal details.
4. Report suspicious activity
If you receive nuisance calls, texts, or see misleading adverts, report them to the relevant authorities:
• Report spam calls and messages to the Information Commissioner’s Office • Report misleading adverts to the Advertising Standards Authority • Taking action helps regulators crack down on bad practices and protect other consumers. Miles Lockwood, director of complaints and investigations at the Advertising Standards Authority, said: “It’s vital that ads promoting motor finance redress services are clear about the commitments and costs of engaging with a CMC or law firm. The ASA will take robust and proactive action to tackle misleading advertising of such services, working in partnership with other regulators as part of this taskforce.”
• Report spam calls and messages to the Information Commissioner’s Office • Report misleading adverts to the Advertising Standards Authority • Taking action helps regulators crack down on bad practices and protect other consumers. Miles Lockwood, director of complaints and investigations at the Advertising Standards Authority, said: “It’s vital that ads promoting motor finance redress services are clear about the commitments and costs of engaging with a CMC or law firm. The ASA will take robust and proactive action to tackle misleading advertising of such services, working in partnership with other regulators as part of this taskforce.”
Remember: you can claim for free, avoid unnecessary fees, and stay alert to scams. If it seems to good to be true, it probably is, so always check with the proper channels.