£2m FCA campaign risks steering claimants away from legal advice

The Consumer Legal Association (CLA) is deeply concerned that the Financial Conduct Authority’s (FCA) new £2 million advertising campaign presents getting professional legal advice on motor finance compensation as an unnecessary expense. This sentiment risks steering claimants away from legal advice that could help them establish their eligibility, identify errors in a lender’s decision and assess whether any compensation offered is fair.

The scale and uncertainty surrounding the motor finance redress scheme makes claimants’ choice especially important. The FCA estimates that 12.1 million motor finance agreements entered into between April 2007 and November 2024 are eligible for the scheme, with £7.5 billion expected to be paid in compensation.

However, ongoing legal challenges and the partial suspension of the scheme have made the position more difficult for claimants to navigate. It should also be noted that the scheme does not capture all those that may well be entitled to compensation and who will be forced to seek redress through alternative means.

“Claimants should know they can complain directly for free,” said David Whitmore, Chair of the CLA. “But the FCA has stated that ‘You don’t need to pay to claim’ and that claimants may pay for ‘a service you don’t need’. Those statements risk presenting professional legal advice as unnecessary before someone understands their case. This is about choice, and claimants should decide whether they want help.”

Under the scheme, lenders make the initial decisions about whether a claimant is eligible and how much compensation they should receive. Claimants can pursue their claim directly for free but may choose to seek independent legal advice to understand the decision, check the amount offered and challenge any possible error within the one-month deadline.

The need to preserve that choice is demonstrated by the FCA’s own research, which found that more than one in four motor finance customers (27%) lack confidence in making a complaint without a claims management company or law firm.

“A claimant could be wrongly told they are not eligible, offered too little compensation or miss the deadline to challenge the lender’s decision,” Whitmore added. “That risk is particularly concerning for claimants with low financial confidence, limited digital skills or other vulnerable circumstances.”

The CLA will continue raising these concerns with the FCA and SRA and has written to the Treasury Committee calling for proportionate enforcement that protects claimants and preserves informed choice.