FCA and SRA Joint Message to Professional Representatives on Motor Finance Commission Claims: Dealing with Multiple Representation and Excessive Termination Fees

Why It Matters

Multiple representation inflates costs and erodes consumer confidence, while excessive termination fees breach fairness rules, exposing firms to regulatory sanctions and reputational damage.

Key Takeaways

• Up to four agents can represent a single motor claim.
• Regulators require clear termination‑fee disclosure and proportionality.
• Robust onboarding checks must verify no existing representation.
• Non‑compliant firms face enforcement under Consumer Duty and CRA.

Pulse Analysis

The motor‑finance redress scheme has generated a surge of claims‑management companies and solicitor firms eager to capture a share of the anticipated payouts. While the market offers consumers a route to recover unlawful charges, the rapid onboarding of clients has exposed gaps in due‑diligence, prompting the Financial Conduct Authority (FCA) and the Solicitors Regulation Authority (SRA) to intervene. Their joint statement reflects growing regulator fatigue with fragmented representation and opaque fee structures, signalling that the sector will face tighter oversight as the redress process matures.

Multiple representation—where a borrower signs up with two or more agents for the same claim—creates operational duplication, delays resolution and inflates costs for both consumers and firms. The FCA‑SRA warning cites instances of up to four advisers handling a single case, a situation that can trigger excessive termination fees when contracts are unwound. Regulators now expect firms to conduct rigorous onboarding checks, confirm the absence of prior instructions, and cooperate with any competing representative to consolidate the claim efficiently.

Termination fees must be reasonable, transparent and proportionate to work actually performed, in line with the Consumer Duty and the Consumer Rights Act. The FCA has already used its CRA powers to audit contracts, uncovering fee caps being breached and dual‑charging practices. Firms that fail to justify fees or that charge for unperformed work risk enforcement actions, including fines or licence restrictions. Best practice therefore includes itemising fees, maintaining clear records, obtaining explicit client consent before any termination and ensuring advertising does not mislead about costs.