The FCA and SRA have written to claims management companies and law firms involved in motor finance commission claims again. This time, the regulators are warning firms to make sure claimants do not have multiple representatives for the same claim. It has seen cases where representatives have not properly checked whether a client is already represented for a claim and sometimes clients have had up to 4 different representatives. This then risks the clients being charged potentially excessive termination fees when they try to cancel duplicate agreements.
Additionally the regulators note that multiple representation creates delays and confusion for consumers, and operational strain and unnecessary cost for firms that receive the claims. There is clear guidance on what firms must do if they find their client has instructed another representative, how to prevent a recurrence and how to deal with existing duplicate claims.
On the excessive termination fees, while this is a particular concern where there is multiple representation, the FCA says it does also arise in more routine termination such as where clients want to terminate because they are planning to opt in to the redress scheme themselves. It calls on firms to consider whether charging a fee at all is fair and, if so, whether the amount is reasonable – for example, if the investigation up to the point of termination suggested the consumer would not succeed, it may not be reasonable to charge anything at all.
The regulators warn that they will act under their relevant powers wherever they see the need.