The Financial Conduct Authority has launched a review of the claims management market. It follows growing concern that consumers are being let down by some claims management companies and law firms.
The review will examine the root causes of poor practices across the sector. These include aggressive marketing, misleading advertising and unfair exit fees. The FCA is also concerned about consumers being signed up without proper consent, including through social media adverts, and about individuals being represented by multiple firms without realising it.
While motor finance claims have brought these issues into sharper focus, the regulator has made clear the review extends to other areas, including housing disrepair claims.
Joint regulatory taskforce with SRA
On the same day, the FCA published the scope of its joint regulatory taskforce with the Solicitors Regulation Authority, the Information Commissioner’s Office and the Advertising Standards Authority. The taskforce was first announced in March 2026 to tackle poor handling of motor finance claims.
Its remit covers misleading advertising, questionable sign-up processes, meritless claims and multiple representation. It will also examine firms’ financial and operational resilience, including accounting and audit practices.
Scale of action so far
The FCA has already taken significant action. It has removed or amended over 800 misleading adverts and enabled more than 28,000 consumers to exit contracts free of charge. Three CMCs have reduced unreasonable fees, protecting over 500,000 consumers. At least one formal investigation has been announced.
The SRA reported that, as of 30 April 2026, it has 109 open investigations relating to 76 law firms handling high-volume consumer claims. The SRA regulates around 9,000 firms in England and Wales.
Why It Matters
This is the strongest solicitor-facing regulatory story today. It affects claimant firms, CMCs, compliance teams and any firm handling motor finance, housing disrepair or other high-volume consumer claims. The joint taskforce signals coordinated enforcement across regulators, raising the stakes for non-compliance.
What the review will cover
The FCA has said it will examine whether consumers are receiving fair value. This includes how pricing structures operate and whether fee arrangements create conflicts of interest. The regulator will also assess whether existing price caps remain fit for purpose, particularly where free redress mechanisms are available.
The review will look at financial incentives, funding and insurance arrangements across the claims management supply chain, including lead generators.
Potential for legislative change
Where the FCA believes legislative change is needed, it will make recommendations to government. This could include whether CMCs and law firms should face stronger compensation mechanisms if they cause consumer harm.
Alison Walters, director of consumer finance at the FCA, said the review would provide a clear picture of how the market is working and drive further action. Aileen Armstrong, SRA executive director of strategy, innovation and external affairs, described it as a cross-sectoral problem requiring joined-up solutions.
Practical points for solicitors
Firms involved in claims management work should review their client onboarding processes, advertising compliance and fee transparency now. Compliance teams should ensure consumer consent is properly documented and that clients understand representation arrangements from the outset.
More detail on the review is expected by mid-May 2026. The FCA has said it expects full, prompt and open cooperation from all parties under review.