Car finance claims firms charging UK drivers 30% of payouts
Key Points
- Claims firms can charge over 30% of car finance compensation in fees, while complaining directly to lenders is free
- FCA removed or amended 170 misleading car finance claims adverts in June, over 1,200 since January 2024
- Some adverts posed as ordinary consumers on social media without disclosing they were paid promotions
- Eight unauthorised firms named in FCA alerts; ASA has launched six formal investigations into law firm adverts
- Over 28,000 consumers have exited claims contracts free of charge through taskforce action
Drivers using claims firms to seek car finance compensation risk losing over 30% of any payout in fees, the Financial Conduct Authority has warned.
The regulator issued the warning as it announced fresh action against misleading car finance claims advertising.
In June alone, the regulator forced claims management companies to remove or amend 170 misleading adverts, bringing the total to more than 1,200 since January 2024. The FCA reviewed 255 promotions across 83 authorised firms during the month and wrote to 36 firms over breaches of financial promotion rules or failures under the Consumer Duty.
The regulator stressed that drivers can complain directly to their lender for free, with no claims firm involved. It also warned against signing up with multiple claims firms, as this could leave consumers paying several sets of fees on the same compensation.
Adverts disguised as ordinary drivers
Some of the misleading adverts identified by the FCA posed as ordinary consumers posting on social media. These posts recommended a website for looking up finance agreements without disclosing that they were financial promotions from a claims management company plugging its own service.
Other adverts used the FCA’s motor finance redress scheme in ways that could suggest an affiliation with the regulator, failed to highlight free claim options, or promoted claims management services without authorisation.
The FCA issued eight alerts in June against unauthorised firms, naming companies including Immaculate Ltd trading as UK Claims, PCP Claims UK, My Claims Buddy Ltd, and CarFinanceClaim, a trading style of Black Knight Global Ltd.
Alison Walters, Director of Consumer Finance at the FCA, said consumers should be able to trust the information they see about car finance claims. “Too often, we are still seeing promotions that obscure key facts, create unnecessary pressure on consumers to sign up, or risk misleading people about their options,” she said.
Four regulators now circling claims firms
The crackdown comes from a joint taskforce of the FCA, the Advertising Standards Authority, the Solicitors Regulation Authority, and the Information Commissioner’s Office.
The ASA has launched six formal investigations into motor finance claims adverts placed by law firms, examining fee transparency, exaggerated compensation figures, and potentially misleading “free checker” tools. It is using an AI-based Active Ad Monitoring system to scan ad claims at scale.
The ICO has received over 12 million complaints from the public since September 2025 about nuisance calls, texts, and emails, with multiple active investigations underway into claims firms and lead generators.
The FCA has also confirmed enforcement investigations into The Claims Protection Agency Limited and Consultation Claims Limited, and recently banned adverts from a claims firm that used edited, unauthorised clips of Martin Lewis to make misleading compensation claims.
The taskforce’s work has delivered concrete wins for consumers so far. More than 28,000 people have exited claims contracts free of charge, while three claims firms cut unreasonable fees in changes protecting over 500,000 consumers. The FCA has secured voluntary requirements with 12 firms over the past 12 months, forcing them to stop or change their marketing activities.
Drivers with concerns about how a claims firm signed them up, used their data, or charged exit fees should complain directly to the firm. The FCA has published a template letter on its website to help.
