Consumers warned about misleading car finance 'money tips' claims ads

As part of the joint regulatory taskforce[2], the FCA has identified a growing number of adverts that appear to offer independent advice from an individual but are in fact paid promotions from CMCs and law firms encouraging people to sign up for motor finance claims.

Consumers should be aware that some adverts:

• Pose as impartial advice from individuals, without clearly saying they are promoting a business.
• Misuse logos, imagery or references linked to well-known companies, media outlets or public bodies or figures to falsely suggest their approval or endorsement. The FCA recently banned adverts from a CMC[3] which used edited, unauthorised clips of Martin Lewis, Money Savings Expert, to make misleading claims about average car finance compensation.  
• Fail to make clear that you can make a claim yourself for free.

Following action from the FCA, one firm has already agreed to take down all of their adverts. The FCA, working with its regulatory partners, will take further action to stop consumers being duped into signing up without the right information.  

Firms must remove any content that misleads consumers and prevents them from making informed decisions. Firms are expected to take action to ensure any consumers that were misled into signing up are put back into their original position. This may include unwinding contracts for free.

Alison Walters, director of consumer finance at the FCA, said:  

'Accessing compensation is free, and people don't need to use a claims management or law firm to get what they’re owed. If they choose to, it should be a genuine and well-informed choice, not one made because of a misleading advert.'

Advice for consumers

Consumers do not need to use a CMC or a law firm to make a car finance claim – information on how to make a complaint for free is available on the FCA website[4]. 

If you choose to use a CMC or law firm, you may have to pay a fee of over 30% of any compensation, and you should not sign up to more than one firm, or you may have to pay multiple fees.

Poor practice by claims firms

The FCA and its regulatory partners have serious concerns about how some CMCs and law firms have been operating. Reports of poor practice include:

• Unwanted texts or emails, driving 6 million complaints to the Information Commissioner’s Office this year.  
• Consumers being misled by adverts or signed up without their knowledge or consent — for example, by clicking a 'free compensation checker' on social media.  
• Firms making it difficult for consumers to exit agreements where they have been misled into signing up, aggressively pursuing fees, charging unfair exit fees, or making exaggerated claims for work already done.  
• Firms failing to keep clients updated, explain their options fully, or make clear that consumers can take a complaint to the relevant Ombudsman for free.

Complaining to a CMC or law firm

If you have concerns about how you were signed up, whether you were properly informed and gave consent, how your data was used, the handling of your case, or the fee charged to exit your contract, you should complain directly to the firm. The FCA has created a template letter (DOC)[5] to help.

If you signed up and now wish to cancel, you may be asked to pay a fee. That fee must be reasonable and reflect the work done. Most car finance claims are still at an early stage, so any fees you’re asked to pay should match the work carried out so far. Given the widespread poor practice we have seen, you should check very carefully the basis for any fee before paying it.

If you think you have been signed up without consent, misled or treated unfairly, you can ask to exit your contract for free and may also be owed compensation by the CMC or law firm. Charges may not be appropriate if CMCs and law firms have not complied with the law in how they have handled your case and your data.

If you're unhappy with the firm's response, you can take your complaint to the relevant independent Ombudsman. If the firm is regulated by the FCA, go to the Claims Management Ombudsman[6]. If it is regulated by the Solicitors Regulation Authority, go to the Legal Ombudsman[7]. They can consider your case for free, including whether the fee you are being charged is reasonable and whether you are owed compensation for unfair treatment. We encourage consumers to use these services to ensure they are treated fairly.

Notes to editors

• A joint taskforce was launched in March[8] to tackle the poor handling of motor finance claims. The FCA also launched a review of the claims management market[9] to look at the root causes of poor practices across the market.
• As a result of the FCA’s work, over 1,000 misleading adverts have been removed or amended since January 2024, more than 28,000 consumers have been able to exit contracts free of charge, and 3 CMCs reduced their unreasonable fees protecting over 500,000 consumers. 10 CMCs have agreed to make changes to their processes through voluntary requirements (VREQs):
  • 4 have agreed not to onboard new clients    
  • 2 firms agreed to terms relating to exit fees and 4 firms agreed to terms relating to their advertising    
• The FCA has confirmed 2 enforcement investigations into The Claims Protection Agency Limited[10] and Consultation Claims Limited[11].