The Financial Conduct Authority (FCA) has begun a review of the UK claims management sector after raising concerns about the treatment of consumers by some claims management companies and law firms.
The regulator will investigate the underlying reasons for poor practice in the market, including forceful promotion, deceptive advertising and exit charges it considers unfair.
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It also pointed to cases where people may have been enrolled without proper consent, without a clear explanation of the consequences of signing up or ticking a box, including through social media advertising.
Another issue identified is multiple representation, which may create confusion and slow compensation payments.
The FCA will carry out the work alongside the Solicitors Regulation Authority and other regulatory bodies.
Using its review, supervision and enforcement powers, it plans to assess whether consumers are receiving “fair value”, including through “competition” on price and service quality, and whether current price caps remain suitable, particularly where no-cost redress routes are available.
The review will also examine financial drivers such as charging models, funding and insurance arrangements, and whether these create “conflicts of interest” or contribute to “poor conduct and outcomes”.
In addition, it will look at the whole consumer experience, from lead generation to marketing and advertising, to determine whether the process produces acceptable outcomes for consumers.
Another area of focus will be whether differing rules across regulatory frameworks influence company behaviour, and whether some businesses are operating without the correct permissions.
The exercise will cover companies under FCA oversight, including lead generators, as well as businesses authorised by other bodies, in cooperation with partner regulators.
The FCA said it expects “full, prompt and open cooperation from all parties we engage in the review”.
It added: “We, with our regulatory and enforcement partners, will take robust action if this is not forthcoming.”
If the regulator concludes that changes in legislation are required, it will put forward recommendations to the government or other relevant bodies.
That could include considering whether claims management companies and law firms should face stronger compensation arrangements where they have caused harm.
More details of the review are due by mid-May.
FCA consumer finance director Alison Walters said: “CMCs [claims management companies] and law firms can help consumers secure compensation they are owed. But too often consumers are being let down, eroding trust in firms that should be supporting them and damaging the economy.
“This review will give us a clear picture of how the market is working and galvanise the further actions that are needed.”
In December 2025, the FCA set out a series of measures to examine and improve standards in UK home and travel insurance after a super complaint from consumer group Which?.
