FCA sets out expectations of CMCs involved in motor finance commission claims

Following the launch of its much awaited consultation on the motor finance redress scheme, the FCA has written a letter to claims management companies (CMCs) involved in motor finance commission claims, setting out key issues it is monitoring, and what it expects of firms engaging in the scheme on behalf of consumers.

To avoid misleading advertising, the FCA reminds firms that they should review their financial promotions to ensure compliance with Consumer Duty and rules for CMCs. In particular, it has concerns over:

• Exaggerated claim values;
• CMCs implying refunds are guaranteed;
• CMCs creating undue urgency;
• CMCs suggesting knowledge of agreements where none exists; and
• Customers clicking on adverts, providing their details and automatically being signed up without their knowledge or consent.

The FCA also urges firms to ensure they are complying with pre-contract disclosure rules, taking immediate steps to comply and review past cases to assess potential consumer impact. It has also received reports of consumers engaging with more than one representative, even thought its rules are designed to prevent multiple representation, and sets out expectations for firms to deal with these situations once disclosed to them.

Broadly, the FCA asks that firms prepare for consumers seeking to exit contracts to participate directly in the redress scheme.