SRA and FCA issue joint warning over motor finance claims

The UK's motor finance industry is under the spotlight, and the regulators aren't holding back.

In a rare joint move, the Solicitors Regulation Authority (SRA) and the Financial Conduct Authority (FCA) have issued a strong warning to law firms and claims management companies (CMCs) involved in mass motor finance compensation claims. Their message is clear: stop misleading consumers, clean up your marketing, and be upfront about the availability of free redress.

At i agree , we believe this moment says more than just “watch your advertising.” It speaks to a wider issue in financial and legal services: the ongoing failure to ensure people actually understand what they’re signing up for.

In this blog, we’ll cover:

• What’s happening: a wave of motor finance commission claims
• What the regulators are saying and why it matters
• The wider legal context and potential for redress
• Why this matters to i agree and our users
• What it means for consumers, firms and regulators
• Conclusion: understanding before agreement matters more than ever

What’s happening: a wave of motor finance commission claims

Between 2007 and 2021, millions of UK consumers took out car finance agreements, most commonly Personal Contract Purchase (PCP) and Hire Purchase (HP) plans, without being told that car dealers or brokers were being paid a discretionary commission. These commissions created a clear conflict of interest: brokers could increase interest rates to earn more for themselves.

The FCA banned discretionary commission models in January 2021, calling them “harmful and unfair.” But what about all the agreements signed before that?

Consumers have since brought claims against lenders and brokers, alleging that undisclosed commissions breached their right to a fair deal. Thousands of claims have already been filed, and many more are on hold pending the outcome of a landmark Supreme Court case expected in early August 2025.

What the regulators are saying and why it matters

In July 2025, just ahead of the Supreme Court ruling, the SRA and FCA issued a joint warning targeting the practices of law firms and CMCs operating in this space.

They’ve expressed strong concern over:

• Misleading advertising, with inflated compensation figures and suggestions that payouts are guaranteed
• Unclear pricing and cancellation terms, where some firms charge up to 30–36% of any compensation won, even if a free scheme becomes available later
• Failure to inform consumers of the likely availability of free alternatives, including any potential FCA redress scheme

To date, the FCA has forced 224 promotional materials to be amended or removed. Meanwhile, the SRA reports 89 live investigations across 73 law firms suspected of breaching rules tied to high-volume claims solicitation
(Sources: Business Matters, The Times, Solicitors Regulation Authority).

The regulators didn’t mince their words:

SRA CEO Paul Philip emphasized:
"Law firms have a regulatory duty to act in the best interests of their clients ... if they mislead clients, fail to get their explicit consent, do not explain cost information clearly or do not share information on free alternative routes, they are clearly failing."

FCA Executive Director Sheree Howard added:
"We’ve seen law firms and CMCs advertising highly speculative figures ... Consumers should be aware that by signing up now … they may end up paying for a service they do not need and losing up to 30% of any money they may receive."

This is a warning not just to a few bad actors but to the wider sector that transparency, consent, and fair practice are non-negotiable.

The wider legal context and potential for redress

At the heart of the issue is a series of legal claims arguing that lenders and brokers should have disclosed the existence and amount of commissions paid, and that failing to do so makes the agreements “unfair” under the Consumer Credit Act.

The Supreme Court is reviewing a set of test cases that will determine:

1. Whether non-disclosure of commissions automatically breaches the duty of fairness
2. Whether customers are entitled to redress or cancellation of their finance agreements

Some analysts have warned that this could be the next PPI-style compensation scandal. While early forecasts suggested lenders might owe £30–£40 billion, more recent estimates have revised that figure down to £11–£15 billion, depending on how the courts rule and how many consumers are affected.

The FCA has pledged to launch a public consultation within six weeks of the Supreme Court ruling to determine how redress should be handled, including whether a free, streamlined scheme should be made available.

Why this matters to i agree and our users

At i agree , we see this case as a perfect example of why traditional methods of "agreement" fall short.

Let’s break it down:

• Many consumers signed contracts but never understood how commissions worked, or that they were even being paid
• They weren’t told about conflicts of interest or how their interest rate was calculated
• The information might have been there, buried in legal terms, but no one actually explained it to them

This is exactly the gap that i agree exists to close.

Our platform doesn’t just collect a signature. It provides clients with a simple, spoken summary of key terms, in plain English. That way, people can make informed decisions before they agree to anything.

If lenders or brokers had used a model like ours, there likely wouldn’t be a scandal in the first place.

What it means for consumers, firms and regulators

• Don’t rush into signing contracts with claims firms. There may be a free alternative soon
• Read the fine print on any offer, especially cancellation terms and fees
• Wait for the Supreme Court ruling and the FCA’s guidance on the next steps

• Ensure that costs and cancellation rights are clearly explained in plain English
• Stop using speculative marketing and always mention the potential for free redress
• Review your onboarding materials to ensure they meet SRA and FCA requirements

• This is a test of consumer protection frameworks in a new era of legal technology
• It also reveals the risk of a claims culture spiralling without firm oversight
• Transparency, not litigation, should be the foundation of consumer agreements

Conclusion: understanding before agreement matters more than ever

This joint warning from the SRA and FCA isn’t just about motor finance. It’s about how we agree, and whether that process is fair, informed, and transparent.

Consumers shouldn’t need a law degree to understand what they’re signing. And they shouldn’t be misled by flashy adverts promising the world. Whether you’re a borrower, a broker, or a solicitor, the principle is the same:

Clarity first. Consent second. Only then can we say: “I agree.”

At i agree , we’ll keep building tools that empower people to make confident, informed decisions. And we’ll keep calling out the systems that let hidden terms and unclear processes undermine real agreement.

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