Motor finance claims: the FCA turns its fire on the intermediaries

The FCA's crackdown on claims-side conduct is now the more revealing story in motor finance. In June alone, the regulator had 170 misleading car finance claims adverts pulled or amended by claims management companies, taking the running total to 1,200 since January 2024 (FCA). Alongside this, the FCA secured voluntary requirements with two more firms, bringing the twelve-month total to 12, and issued 8 alerts in June against unauthorised firms promoting regulated claims management activities (FCA). The taskforce, which also includes the Advertising Standards Authority, the Solicitors Regulation Authority and the Information Commissioner's Office, is coordinating enforcement across advertising, legal practice and data protection at the same time.

The intermediary problem

The pattern of misconduct is instructive. Adverts have been disguised as organic social media posts, have implied affiliation with the FCA's own redress scheme, and have failed to disclose that consumers can complain directly to lenders for free (FCA). Alison Walters, director of consumer finance at the FCA, said promotions are still obscuring key facts and creating "unnecessary pressure on consumers to sign up" (FCA). With CMC and law firm fees exceeding 30% of any compensation, the economic incentive for aggressive marketing is obvious, and so is the drag it will put on the net value consumers actually receive from any lender-funded redress (FCA).

What this shifts for lenders and their boards

For motor finance providers and their parent banks, the practical implication is that a significant share of complaints entering the pipeline will have been generated by promotions the regulator considers defective. That has three consequences. First, complaint volumes will be inflated by claims from consumers who did not understand they could go direct, raising handling costs without changing underlying liability. Second, the ASA's use of its AI-based Active Ad Monitoring system to scan financial ads at scale means the evidentiary record of intermediary misconduct will keep growing, giving lenders grounds to challenge the provenance of certain claims cohorts (FCA). Third, the reputational externality of the redress scheme is being partly reassigned: it is now the CMCs and law firms, not just the lenders, whose conduct is under public scrutiny.

The coordination signal

The more strategic read is about regulatory architecture. Four regulators acting jointly, with the ASA running investigations into law firm advertising and the FCA taking action against unauthorised claims activity, is a template. It suggests the FCA is comfortable operating through adjacent regulators to reach conduct that sits just outside its perimeter, an approach that will matter well beyond motor finance: authorised push payment fraud, crypto promotions and buy-now-pay-later marketing all have similar intermediary layers. Boards should read this as a signal that perimeter arguments, the classic "not our regulated activity" defence, are losing purchasing power.

For senior leaders, the immediate task is unglamorous but material: instrument complaint intake to identify CMC-sourced cases, preserve advertising evidence where promotions appear to breach FCA rules, and brief investor relations on the difference between gross redress exposure and the share that will reach consumers. The claims industry has become part of the motor finance risk model, and pretending otherwise is no longer tenable.