The Financial Conduct Authority has warned law firms representing clients involved in motor finance commission claims they must act in the claimants’ best interest and not charge exorbitant exit fees.
The watchdog has teamed up with the Solicitors Regulation Authority to make sure that all rules are being followed, as claims continue to build up and say that claims management companies and law firms need to make sure that consumers do not have multiple representatives for the same claim and are not charged excessive termination fees.
Firms are also being reminded that they are expected to have ‘robust checks’ in place to confirm that consumers have not already instructed another representative in relation to the same claim and has also written to lenders setting out the potential actions they should take to address this issue.
Where claims have more than one representative, firms should work together and consult with the customer to agree the sole representative, the regulators say.
They add that if a customer wants to switch representatives or terminate an agreement, firms must do so without charging unfair fees and any fees charged must be reasonable and reflect the work done.
Tens of thousands of car buyers have been charged unfair interest by lenders working with dealers and it has gone to the High Court which has ruled the motorists may not get the huge sums quoted by solicitors and claims management companies, but if they pull out of a action they could be charged high exit fees to terminate a contract.
