The Financial Conduct Authority has launched a review of the claims management sector following concerns that some firms are failing customers and undermining trust.

The review will examine the root causes of poor practices across the market. It will focus on aggressive marketing, misleading advertising and unfair exit fees, as well as cases where consumers are signed up without clear consent or approached by multiple representatives, causing confusion and delays to compensation.

The review comes amid heightened scrutiny of motor finance claims, though the FCA said concerns also extend to areas such as housing disrepair. Despite previous warnings, regulators say problematic behaviour persists.

Working with the Solicitors Regulation Authority, the FCA will assess whether consumers receive fair value, whether fee caps remain appropriate and whether financial incentives create conflicts of interest. It will also examine the full consumer journey and differences in regulatory regimes that may affect firm behaviour. The watchdog said it expects full cooperation and will take robust action where needed, including recommending legislative changes.

Alison Walters, director of consumer finance, said: “CMCs and law firms can help consumers secure compensation they are owed. But too often consumers are being let down, eroding trust in firms that should be supporting them and damaging the economy. This review will give us a clear picture of how the market is working and galvanise the further actions that are needed.”

Aileen Armstrong, SRA executive director, strategy, innovation and external affairs, added: “When they work well, claims management services can benefit consumers. But we are concerned about poor practices and behaviours that are not looking after consumers’ best interests. We will work closely with the FCA on this important review. This is a cross-sectoral problem that requires joined-up solutions.”

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