FCA and SRA joint message to professional representatives on motor finance commission claims: dealing with multiple representation and excessive termination fees

We have seen some clients with up to 4 different representatives for the same claim. They risk being charged termination fees, which could be deemed excessive, should they try to cancel duplicate agreements.

Multiple representation

The FCA and SRA expect representatives to make sure clients have made informed decisions before they start work on their case. They should also be clear to new clients about what termination fees they would charge. Representatives should undertake due diligence when onboarding clients, which should include steps such as checking that the client is not already represented. Some representatives have fallen short of these expectations, which has increased the number of multiple representations.

Multiple representation creates delays and confusion for consumers. It also creates operational strain and unnecessary cost for firms receiving claims. Representatives should act in clients’ best interests by co-operating and agreeing efficient and cost-effective measures to resolve duplicate claims.

Even where initial checks were reasonable, clients may have later engaged another representative with weaker onboarding practices. We strongly encourage all representatives to take steps to mitigate the potential impact on clients, especially where contracts allow additional claims to be identified and pursued. Representatives should confirm their client’s authority to instruct them for each individual claim. Representatives must also ensure their adverts do not mislead consumers into unknowingly signing up to new agreements.

If you become aware your client has instructed another representative, you should:

• Inform your client immediately and explain what multiple representation means for their claim including consideration of termination fees.
• Advise them of their options to progress their claim and provide the information needed for them to make an informed decision about the future of their claim.
• Keep a written record of your discussions.
• Ensure they understand those options, for example by presenting information both verbally and in writing.
• Support file transfer, with the client’s consent, if they choose to proceed with another representative, and consider writing to the respondent firm to confirm the client is no longer instructing you.

To prevent recurrence of this issue, representatives should: 

• Carry out robust onboarding checks to confirm the client is not already instructing another representative for their claim. 
• Only enter into a new agreement once the client has terminated any previous instruction and made an informed decision to proceed.
• Confirm your client’s instruction of you in writing to the client, respondent firm, and previous representative. 
• Clearly inform the client about the implications of signing up to additional agreements, such as termination fees.

For existing duplicate claims:

• Resolve the issue urgently to avoid unnecessary delays, working in partnership with firms progressing claims. The FCA is also writing to respondent firms on this subject.
• Engage with the client and any other representatives to confirm how the client would like to proceed and ensure the client’s wishes take precedence.
• Notify the respondent firm promptly of the single acting representative.
• Consider whether any termination fee is appropriate and justifiable, particularly where onboarding checks were inadequate. 

Many contracts or letters of authority state that no other representation exists or that the document supersedes previous instructions. Representatives should not seek to rely on these terms without evidence of adequate pre-contract checks and clear prominence to the client. Clients should understand what they are signing and the impact of these terms. Where an agreement claims to supersede earlier instructions, representatives should be able to show they explicitly explored existing representation.

Multiple agreements for the same claim generally indicate poor onboarding. In most cases, the appropriate remedy is to put the client back in the position they would have been in had proper due diligence been carried out. This may mean terminating a contract without a fee.

The SRA’s updated Claims Management Activity guidance illustrates how representatives should approach the issue of multiple sign-ups.

Excessive termination fees

We have seen several examples where clients are, or could be, charged excessive termination fees. While this is a particular concern in cases of multiple representation, it also arises in more routine termination, such as where clients plan to opt-in to the proposed motor finance redress scheme themselves. Representatives should review termination requests and assess whether charging a fee is fair and the proposed amount is justifiable. This includes considering:

• the adequacy of the onboarding process; and
• the actual work completed.

Where a representative believes a termination fee is reasonable, they should keep a clear record of how the termination fee has been calculated and may be required to provide evidence of this.

When a client terminates their agreement, representatives should remain mindful of the likely outcome had the contract continued. If the representative’s investigation to date suggests the claim is unlikely to succeed and the client has not been updated about the change in prospects, it may not be fair to charge any termination fee at all.

FCA-regulated representatives must ensure termination fees:

• are reasonable and proportionate to the work done;
• are itemised clearly for clients; and
• provide fair value under the Consumer Duty.

SRA-regulated representatives should ensure termination fees are fair and proportionate. The SRA would find the following behaviours concerning:

• charging clients for work that has not been done or is not chargeable;
• undertaking unnecessary work to increase fees and maximise charges;
• charging more than what the fee cap would have allowed, as set out under the SRA’s Claims Management Fee Rules;
• charging fees which exceed an amount that is reasonable in the circumstances in the light of the services provided; or
• charging excessive hourly rates including unnecessarily imposing charges of a higher grade of fee earner.

We will act where we see misconduct or the unfair treatment of clients

The FCA and SRA are working in partnership to consider the appropriate regulatory tools at our collective disposal to uphold consumer confidence and trust.

The FCA has used its Consumer Rights Act 2015 (CRA) powers to obtain and review contracts and information from a sample of SRA-regulated representatives. This review revealed wide fee variation, with some structures lacking transparency and potentially being disproportionately high under the CRA if applied unfairly. For example, terms allowing the firm to charge both a termination fee and the full success fee if the claim later succeeds. These concerns have been shared with the SRA. The SRA has reviewed these concerns and relevant material, which will support its investigations. The FCA will be writing to the relevant firms.

It is the responsibility of all firms to ensure that they comply with consumer protection law. This includes ensuring that the terms in their consumer contracts comply with the fairness and transparency requirements of the CRA.

FCA-regulated representatives are required to comply with the Consumer Duty and the claims management rules found in the Claims Management Conduct of Business Sourcebook.

The SRA’s regulatory framework requires representatives to comply with all regulatory requirements including the duty to uphold public trust and confidence in legal services, to act with integrity and in the best interests of each client. The Code of Conduct for Solicitors further states that solicitors must not take unfair advantage of their clients, and they must ensure their clients’ circumstances are properly considered. The Code of Conduct for FCA firms similarly requires firms to act fairly, avoid misleading clients, and provide good standards of service.

We expect representatives to act in the best interests of their clients, and we are committed to tackling misconduct together. We will continue to monitor the situation closely, including liaising closely with the respective ombudsman schemes, to understand how representatives are handling complaints about these issues.

At 31 January 2026, the SRA had 89 open investigations relating to 71 law firms that manage high-volume consumer claims. It has also closed 7 firms working in this area.

The FCA has tackled misleading advertising, with over 800 adverts removed or withdrawn. Among the small number of FCA-regulated representatives that are involved in motor finance claims, 4 have agreed to stop onboarding clients or make changes to their processes following scrutiny, including not taking on new clients until they are able to show they comply with FCA rules. The FCA has also opened an enforcement investigation against 1 representative, following concerns about its advertising and sales tactics in relation to potential motor finance claims.

We will continue to monitor the conduct of representatives, and act where we identify poor practices.

Firms should also consider

• Relevant guidance for law firms on the SRAs high-volume consumer claims web page, including updated Claims Management Activity guidance which sets out our expectations for dealing with multiple representation.
• Dear CEO letter to FCA-regulated CMCs, October 2025.
• Dear CEO letter (advertising) on to FCA-regulated CMCs, July 2025.