FLA welcomes FCA review on CMC market

The Finance & Leasing Association (FLA) has welcomed the Financial Conduct Authority’s (FCA) market study into claims management services, while encouraging the regulator to take early action in areas where evidence of consumer and market harm is already well understood.

The FLA said the review represents an important opportunity to improve outcomes for consumers and strengthen confidence in the claims management market. It also urged the FCA to work closely with the Solicitors Regulation Authority (SRA), particularly in light of ongoing motor finance commission claims and the potential scale of future redress.

The association said poor practices by some claims management companies (CMCs), claimant law firms (CLFs) and lead generators are creating confusion for consumers, driving up costs, delaying redress and placing unnecessary strain on businesses seeking to resolve complaints fairly and efficiently.

The FLA also warned that the consequences extend well beyond individual firms. Its members provide the finance that supports households and businesses across the UK, funding everything from cars and commercial vehicles to business equipment, plant and machinery. Resources diverted into handling poor-quality, duplicate or speculative claims increase operational costs, reduce productivity and limit the industry’s capacity to support investment, consumer spending and economic growth.

Shanika Amarasekara MBE, Chief Executive of the Finance & Leasing Association, said “We welcome the FCA’s decision to undertake this important market study. It reflects the importance of ensuring that the claims management market works effectively for consumers and firms alike.

“The review also presents an opportunity to take action where there is already clear evidence of consumer and market harm, rather than waiting until the study concludes in 2027.

“Consumers should not face unnecessary delays, confusion or costs because of poor practices in the claims management market. Nor should businesses be forced to devote ever-increasing resources to tackling low-quality, duplicative or speculative claims.

“Addressing these issues is not simply about improving consumer outcomes. It is also about ensuring that firms can focus their resources on supporting customers, financing investment and contributing to economic growth. Every resource unnecessarily diverted into poor-quality claims handling is a resource that cannot be used to support customers, finance investment or help businesses grow.

“We look forward to working constructively with the FCA, the Solicitors Regulation Authority and other stakeholders throughout the review to help identify practical solutions that improve consumer outcomes, strengthen market efficiency and support the wider economy.”