The Supreme Court’s judgment on motor finance commission is imminent. The FCA may follow with an industry-wide redress scheme if consumers have suffered losses due to firms’ failures. The SRA has today reminded firms of their professional responsibilities when managing claims, including advising clients of alternative routes like industry ombudsmen or public compensation schemes (see Claims management activity, car finance and compensation schemes) and to act in clients’ best interests, providing full transparency and options at the initial engagement stage.
Specific Instructions for Motor Finance Claims
- Clients should be informed about the possibility of a compensation scheme being introduced by regulators—even if not yet in place.
- Firms should prepare clients proactively for the Supreme Court decision, planning communications accordingly.
- The FCA has recently extended motor finance complaint timeframes, which firms need to monitor.
- New FCA charges mean that opening 10 or more car finance claims through professional reps now incurs a £250 application fee, refundable as £175 on successful outcomes.
- The SRA’s broader “claims management activity” guidance from July 2024 (see Claims management activity) applies—covering mass claims handling, transparency on fees, ensuring proper client consent, and avoiding mis-selling or rush onboarding.
Key Takeaways:
- Full Disclosure: Always inform clients at the outset about all available routes—including FCA ombudsman and compensation schemes.
- Up-to-date Advice: Mention the potential redress scheme under FCA consideration, even before it’s formalised.
- Proactive Client Engagement: Prepare clients for upcoming Supreme Court developments and regulatory changes.
- Fee Transparency: Disclose the new FCA application fee (e.g., £250) if you’re pursuing mass motor finance claims.
- Maintain Standards: Comply with broader guidance on claims management, ensuring consent, due diligence, accurate client expectations, and no premature work.
