The Financial Conduct Authority (FCA) and the Advertising Standards Authority (ASA) have joined forces with two other regulators to tackle bad practices among claims management companies (CMCs) and law firms in the car finance sector. The crackdown aims to protect millions of motorists still waiting for average payouts of £829.
Regulatory Taskforce Targets Misleading Ads
The ASA has launched investigations into various motor finance claims advertisements placed by law firms. The watchdog is scrutinising issues including clarity around fees, the ability to claim for free via other routes, potentially exaggerated compensation amounts, and consumers being misled by 'free checker' tools. Using a CMC or law firm to make a car finance claim could result in fees of up to 30% of any compensation received.
Consumer Protection at Forefront
Alison Walters, director of consumer finance at the FCA, said: "Consumers should be able to trust the information they see about car finance claims. Too often, we are still seeing promotions that obscure key facts, create unnecessary pressure on consumers to sign up, or risk misleading people about their options."
Miles Lockwood, director of complaints and investigations at the ASA, added: "The work of the taskforce is important; consumers should be treated fairly and be confident that the claims they see in ads for car finance schemes are transparent and truthful. Our investigations will root out problem claims, set clear lines in the sand for advertisers and trigger follow-up enforcement action where necessary."
£7.5 Billion Compensation Pool
Firms are attempting to get a slice of the £7.5 billion that is due to be paid out to 12.1 million victims of the car finance commission scandal. The motorists took out car finance agreements between 2007 and 2024 but may have been overcharged due to “discretionary commission arrangements.” BBC and ITV star Martin Lewis has predicted average payouts of £829.
