The legal watchdog and the FCA have joined forces to issue warnings to law firms and claims management companies over 'poor practices' in motor finance claims, ahead of Friday's Supreme Court ruling.
The Solicitors Regulation Authority (SRA) and Financial Conduct Authority (FCA) are urging law firms and CMCs to inform clients about a potential redress scheme concerning commission fees, as reported by .
In the wake of the Supreme Court ruling, the FCA has confirmed that it will make a decision within six weeks of the judgment on whether to introduce a redress scheme.
READ MORE: {}
However, Paul Philip, the SRA's Chief Executive, has expressed that the regulators are "very concerned about some of the practices we are seeing in the motor finance commission claim market."
The regulatory bodies have stated that some law firms and CMCs have failed to inform consumers about the availability of free-to-claim alternatives, as well as some firms providing inaccurate or misleading information on the likelihood of success or the potential value of a claim.
Sheree Howard, FCA's Executive Director, stated: "We've seen law firms and CMCs advertising highly speculative figures, so we are warning them of our expectations when it comes to drumming up clients for motor finance commission claims."
Countdown to court ruling
Throughout the past year, the FCA reported it has mandated 224 motor finance commission promotions to be modified or removed.
As of 30 June, the SRA maintains 89 active investigations into 73 legal practices, connected to potential violations of its regulations concerning high-volume claims activity.
Most Read
The SRA, which oversees legal practices, and the FCA, which supervises the CMCs, clarify that consumers must be informed of their rights to withdraw and any charges that may be due if they choose not to continue.
Meanwhile, any fees imposed by legal practices or CMCs must be fair and proportionate.
Howard emphasised that "consumers do not need to use a CMC or a law firm" should the FCA proceed with establishing a compensation programme for motor finance.
"Consumers should be aware that by signing up now with a CMC or law firm, they may end up paying for a service they do not need and losing up to 30 per cent of any money they may receive," he cautioned.
Both Howard and Philip confirmed that the organisations are collaborating closely on this matter and where evidence exists they will "investigate and take action" against the companies.
On Friday afternoon, the Supreme Court will announce its ruling on whether to hear or reject the appeals of two lenders whose cases were previously determined by the Court of Appeal to involve unlawfully secured commissions on motor finance, without the customer's informed consent.