The FCA Is Right to Review Claims Management, But It Must Also Listen to the Intelligence Being Provided
The FCA has recently published a blog titled “Is the claims management market working?”, setting out concerns about poor practice by some claims management companies and law firms. The article focuses heavily on motor finance claims, misleading advertising, poor consent processes, cancellation fees, and the wider cost of poor-quality claims activity. The FCA also confirmed that it is launching a comprehensive review of the claims management market.
At Pacific Legal, we support any action that protects consumers from poor conduct. Consumers should not be misled, pressured, signed up without proper consent, or charged unfair fees. A claims market that is trusted, transparent and properly regulated is in everyone’s interests.
But there is another side to this conversation.
If the FCA is asking whether the claims management market is working, it must also ask whether the underlying financial advice market is working properly for consumers.
Claims do not arise in a vacuum
Consumers do not usually complain about financial advice firms for no reason.
Many complaints arise because something has gone wrong. A client may have paid ongoing advice charges for years without receiving the service they were promised. A pension or investment transfer may have been recommended without proper consideration of suitability, risk, costs or alternatives. A consumer may later discover that key charges were not properly explained, that adviser contact was limited, or that the advice file does not evidence the service they were told they had received.
In those circumstances, claims activity is not the cause of the problem. It is often the result of the problem.
The FCA’s own blog recognises that claims management companies and law firms can provide a valuable service and support access to justice. That point should not be lost. Many consumers would not know where to begin without professional support. They may not understand the regulatory rules, complaint process, limitation issues, DSAR disclosure, evidential gaps or redress calculations.
A properly run claims business can help consumers understand their rights, organise evidence and bring legitimate complaints that may otherwise never be made.
Responsible intelligence sharing must lead to visible action
Pacific Legal has gone to considerable effort to provide the FCA with intelligence about issues we are seeing in the financial advice market.
That intelligence is not theoretical. It is based on real client files, complaint responses, DSAR delays, redress patterns, adviser conduct concerns, and repeated examples of consumers struggling to obtain clear answers or full evidence from financial firms.
Where the same issues appear across large numbers of clients, that should be valuable intelligence. It can identify patterns that individual consumers acting alone would never be able to see.
However, from our perspective, despite the intelligence provided and the time spent raising these issues, we have not seen a meaningful difference on the ground.
Consumers are still facing delays. Firms are still able to control the information. Complaint responses do not always address the real issues. Redress calculations are not always transparent. DSARs can be delayed. In some cases, consumers are left waiting for months while firms decide what information they are prepared to provide.
That does not feel like a redress system working as it should.
The scrutiny must be even-handed
The FCA is right to challenge poor conduct in the claims management market.
But scrutiny must be even-handed.
If a claims firm uses misleading advertising, that should be challenged. But if a financial advice firm charged consumers for an ongoing service it cannot properly evidence, that should be challenged too.
If a claims firm fails to support clients properly, that is a regulatory concern. But if a financial firm delays disclosure, fails to provide calculations, gives unclear complaint responses, or makes redress offers without proper workings, that should also attract regulatory concern.
The FCA’s blog says it wants a “fairer, more proportionate and predictable redress system”. We agree. But predictability must not mean making it harder for consumers to bring complaints. It must mean consumers receiving proper evidence, clear explanations and fair redress where harm has occurred.
The professional representative levy creates a further imbalance
There is also a further issue that cannot be ignored.
The introduction of professional representative charges at the Financial Ombudsman Service has changed the dynamics of consumer complaints. The intention may be to discourage poor-quality or speculative complaint activity. However, in practice, there is a real risk that the levy gives respondent firms another tactical advantage.
Many financial advice complaints are not simple. Consumers may be trying to understand pension transfers, investment suitability, ongoing advice charges, adviser charging rules, complaint deadlines, DSAR disclosure, redress methodology and FOS procedure.
These are not straightforward issues for an ordinary consumer to navigate alone.
Professional support can help consumers identify missing evidence, understand complaint responses, challenge unclear redress calculations and present their case properly. It can also assist the Ombudsman by narrowing the issues and organising the evidence.
However, where the system creates an additional cost because a consumer has professional support, there is a risk that respondent firms have an incentive to prefer consumers to proceed unrepresented.
That matters.
It may encourage firms to challenge authority, question representation, or deal directly with consumers in circumstances where the consumer may not fully understand the legal, regulatory or financial issues involved.
This does not improve access to justice. It increases the imbalance between individual consumers and well-resourced financial firms.
A fair redress system should not create incentives that make it harder for consumers to obtain informed support.
The risk of blaming the messenger
There is a danger in focusing too heavily on claims activity without giving equal attention to the underlying conduct that gives rise to complaints.
Of course, poor claims activity should be addressed. Misleading advertising, weak consent processes and poor client service have no place in the market.
But high complaint volumes are not automatically evidence of a claims management problem.
They may also be evidence of widespread consumer detriment.
The regulator must be careful not to treat claims firms as the problem simply because they bring uncomfortable issues to the surface. In many areas of financial services, systemic problems only become visible when enough individual cases are gathered together.
That is precisely where intelligence from responsible claims businesses can help.
Consumers need action, not just reviews
The FCA says it will examine how claims firms find and advertise to consumers, whether consumers are kept informed and supported, whether firms provide value for money, whether business incentives drive poor conduct, and how different regulatory regimes affect behaviour.
Those are important questions.
But consumers also need confidence that when credible intelligence is provided about the financial advice market, it is being acted upon.
Where consumers have paid for ongoing advice, firms should be able to evidence what service was provided.
Where investment or pension transfer advice was given, firms should be able to explain why the recommendation was suitable.
Where redress is offered, firms should provide the calculations, assumptions and methodology.
Where DSARs are made, firms should comply within the required timescales.
Where repeated patterns of concern are raised with the regulator, consumers should be able to see that meaningful action follows.
A better market requires accountability on both sides
Pacific Legal supports a claims management market that is fair, transparent and properly regulated.
Consumers should understand what they are signing, what fees may be payable, what service they will receive, and what alternatives are available to them.
But the same principles must apply to the financial advice firms whose conduct gives rise to these complaints.
A system that only scrutinises those helping consumers complain, while failing to visibly address the underlying conduct complained about, will not command public confidence.
The FCA is right to ask whether the claims management market is working.
But it must also ask whether the financial advice market is delivering the standards consumers were promised, whether intelligence provided by responsible claims businesses is leading to real regulatory action, and whether the current redress framework is creating unintended barriers to professional support.
A system that discourages poor claims conduct is welcome.
A system that leaves consumers facing complex financial firms alone is not.
Nicholas Marrable is Client Engagement & Marketing Director at Pacific Legal. He specialises in making complex financial and legal issues clear and accessible for clients, with a particular focus on ongoing advice fee claims. Nicholas works closely with Levy & McRae Solicitors LLP, a Legal 500 recognised and Times Best Law Firm 2025, to ensure clients receive both accessible support and first-class legal expertise