The Claims Protection Agency Ltd, R (on the application of) v The Financial Conduct Authority

The Claimant is The Claims Protection Agency Ltd. It was originally anonymised by the cipher “CIT”. It is a claims management company. It operates by raising awareness of claims, handling new clients and putting them in touch with solicitors.

The Claimant has operated within the sector of motor finance claims. The motor finance sector has generated claims and potential claims which relate to the activities of finance companies. A customer who bought a vehicle or a number of vehicles, with finance from a finance company, may have a claim against the finance company. The claim may relate to commissions which may have been passed between a finance company and to an intermediary, and which may have been unknown to the customer. This was the subject of divergent legal analyses in the Court of Appeal (14 May 2024) and the Supreme Court (1 August 2025) in Hopcraft v Close Brothers [2025] UKSC 33. In addition to making a claim against a car finance company there are other routes including a complaint to the Financial Ombudsman Service. There has also been the announced prospect of a future redress scheme, imposed on regulated motor finance companies by the FCA. Steps have been taken to minimise for customers the prejudice that might be sustained by them through claims being timed-out.

Regulated claims management companies work with customers of motor finance companies. They engage in marketing. They sign up customers. The past customer of the motor finance company can become a present customer of the claims management company. There are recognised benefits which claims management companies can bring for customers. There are important regulatory duties owed by claims management companies operating in this sector. Those duties include the ways in which marketing takes place, the content of the information which is or is not provided, and the way customers and potential customers are contacted. The FCA has concerns about claims management companies within the motor finance claims sector as a whole. It has said so, in the public domain. There are various patterns of conduct which concern the FCA.

One of the FCA’s specific concerns is as to whether a claims management company has used exaggerated figures as to what a customer may reasonably expect they could recover. There are variables in that picture. For example, whether the figure has been given as an average or as a maximum (“up to”). Or whether it is per claim, or per person. Some people may have more than one claim, if they have acquired more than one car with finance. Or whether expectations have changed because of a changed position taken by different Courts.

Second, whether a claims management company has made it sufficiently clear when signing up a new customer that there are “free to claim alternatives”. You can do the claim yourself, and keep whatever you recover. Or you can let the claims management company and solicitors do it for you, and let them keep their cut. One variable concerns changes which could make the alternatives easier. An example would be the imposition of a redress scheme. These are two main themes. There are others. For example, whether potential customers were pestered. Or whether customers were misleadingly told there was some false urgency.

A first thing was to write an eight-page Dear-Firm Letter, sent to 18 relevant regulated claims management companies operating in the motor finance claims sector. That included the Claimant. This letter asked all 18 firms to review their financial promotions to ensure compliance with relevant rules and standards. It referred to a review which had been announced by the FCA in January 2024, reviewing commission arrangements in motor financing. It describes an engagement between January 2024 and July 2025 with 14 authorised claims management companies specialising in motor finance claims which had resulted in 225 financial promotions being amended or withdrawn. The letter went on to identify concerns relating to financial promotions across a range of media platforms, with 5 bullet points of which the first was the exaggeration of potential claim values. The letter went on to identify the FCA’s expectations as to what the firms ought now to do. It said that the FCA would proactively monitor the market to assess compliance and if non-compliant promotions or inadequate mitigations were identified it would consider appropriate action.

A second thing was to issue a joint press release with the Solicitors Regulation Authority (SRA). This was a 3-page document. It is in the public domain. It stated that the two regulators were warning law firms and claims management companies to make sure that they were compliant with relevant rules in the handling of claims relating to motor finance commissions. There were 3 bullet pointed concerns. These included inaccurate or misleading information about the potential value of claims and failure to advise consumers about the availability of free to claim alternatives. The press release went on to give further detail about what was said to have been the advertising of highly speculative figures and that consumers do not need to use a claims management company or law firm and could lose up to 30% of monies received by doing so. The SRA was described as having 9 live investigations into 73 law firms.

A third thing was to send a bespoke letter to the Claimant. It described the recent supervisory work undertaken with the Claimant including a review of 20 customer files and call recordings, the Claimant’s website and its advertisements, a discussion with the Claimant on 23 July 2025 and a response by the Claimant on 28 July 2025 to an information request. The bespoke letter went on to describe concerns about misleading communications relating to refunds, describing content which had advertised “average” potential refunds of £4,000 and references to a possible £4,500 “per vehicle”. A next topic was excessive chasing of customers who had begun onboarding but not continued and referred to complaints of being excessively chased. The next topic concerned the sufficiency of steps by the Claimant to identify and protect vulnerable customers. There was then a reference to wider concerns and an example of a routine failure to inform customers of their free to claim alternative. The bespoke letter went on to explain the background including previous warnings and assurances which were described as having been contravened. The bespoke letter had attached to it a lot of detailed extracts and examples. There was a draft set of voluntary requirements for which the Claimant was invited to apply pursuant to section 55L(5)(a) of the 2000 Act.

After receiving the bespoke letter, the Claimant decided to send the invited s.55L(5)(a) application on 11 August 2025 for voluntary requirements. This was granted on 12 August 2025. There was an exchange between the FCA and the Claimant as to whether publication of the voluntary requirements was appropriate and the FCA maintained that it was. They are known in the regulatory world as a “VREQ”. The voluntary requirements were published on the FCA’s register on 12 August 2025. They name the Claimant. They describe its voluntary application for immediate requirements ceasing the onboarding of any new customers and the publishing of any new financial promotions with immediate effect, to remain in effect until such time as the FCA was satisfied that they can be lifted. I was told that such an application could be made at any time. That is why the Claimant, for its part, characterises the VREQ as a “pause”. I was told there is one other VREQ in the sector, relating to another claims management company, also published on the FCA’s register.

There have been further communications in the public domain from the FCA. In particular, there was an FCA press release on 1 August 2025 responding to the judgment of the Supreme Court in Hopcraft. There was a further FCA press release on 3 August 2025 stating an intention to consult on imposing a redress scheme on regulated car finance companies.

On 5 August 2025 an internal referral was made within the FCA for consideration to be given to starting an enforcement investigation against the Claimant. By 8 August 2025 active internal consideration was being given to whether the test was met for announcing an investigation publicly. None of this was known to the Claimant.

Then on 12 August 2025 – the same day that the Claimant’s VREQ application was granted, the FCA notified the Claimant that an investigation into the Claimant’s conduct was going ahead, with investigators appointed pursuant to s.170(2) of the 2000 Act. The investigation related to potential breaches. These included, in particular, the following. First, whether advertisements gave misleading statements as to the potential value of claims. Second, whether promotions and communications failed adequately to describe the free to claim alternatives. Third, whether there was high-pressure selling and excessive contact. Fourth, whether there were inadequate arrangements to identify and protect vulnerable customers. The Claimant explained in evidence and submissions why it does not accept the FCA’s concerns. But there is in these proceedings no challenge to the lawfulness, reasonableness or fairness of the decision to undertake the investigation.

The First Memorandum was written by three case team members: Mark Lewis, Joanne Stephens and Catherine Lai. It was dated 13 August 2025. It considered the options of a Naming Announcement (called Option 1) and an Anonymised Announcement (called Option 2). It described the background. That included the FCA concerns relating to the Claimant. It included the VREQs, the Dear-Firm Letters and the FCA’s 3 August 2025 public statement. The First Memorandum reasoned that the Guide’s paragraph [8] criteria for an Anonymised Announcement were satisfied. A footnote explained that paragraph [8] was not seen as an exclusive basis for an Anonymised Announcement but was anticipated, “in practice”, to be likely to be met wherever an Anonymised Announcement was appropriate. It set out the argument in favour of a Naming Announcement, referring to steering other firms. It set out a reasoned recommendation for an Anonymised Announcement, on the basis that the exceptional circumstances test in paragraph [4][i] was not met. It emphasised, in that context, that the misconduct alleged in relation to the Claimant is widespread across the motor claims management sector and not exclusive to the Claimant, referring to a review of a sample of advertisements from the sector. It identified and took account of the heads of potential prejudice to the Claimant from being named. These were impacts on: the Claimant’s ability to attract customers and its ability to retain customers (in each case in the short and longer term); and the Claimant’s ability to retain its advertising investment. The First Memorandum reasoned that there was no obvious value to naming the Claimant. It recognised the value to consumers which claims management companies can bring. It identified the difficulty in justifying singling out the Claimant, given the sector-wide concerns and the potential prejudice.

The First Memorandum was read by the decision-maker, Therese Chambers, who responded by email on 14 August 2025. This email asked the case team to revisit the question of publication. Ms Chambers listed 11 bullet points which she considered merited consideration and which she said had not featured or had been underplayed in the First Memorandum. These bullet points included specific features relating to the Claimant and FCA concerns about its marketing, reach and claims. The points made by Ms Chambers included these. Naming the Claimant would mean being able to warn the Claimant’s customers that they may have signed up with the Claimant on an overstated basis. A Naming Announcement could warn any consumers who had signed up as customers of the Claimant, that they may wish to reconsider and withdraw, rather than losing 30% of a much smaller sum of money than they had been led to believe was on the table.

The Second Memorandum followed on 26 August 2025. It was written by Gareth Buttrill, Mr Lewis, Ms Stephens and Ms Lai.

The Investigation relates to the Firm’s promotion and handling of motor finance claims, a subject about which the FCA has publicly expressed significant concern – particularly in respect of the forthcoming motor finance redress scheme.

We have commenced an investigation into the Firm, relating to its motor finance claims activity in relation to the following matters between 12 August 2024 and 12 August 2025.

In particular, we are concerned that the Firm has in high-profile marketing campaigns asserted that motor finance claimants will receive redress of up to (depending on the advertising) £4,000 or £4,500, in circumstances where (as it has announced publicly) the FCA currently estimates that most individuals will probably receive less than £950 in compensation per agreement. We are also concerned that some of the Firm’s marketing did not include the mandatory information …

As the investigation is at its early stages, no findings have been made and we have not reached any conclusions whether regulatory requirements (such as the Consumer Duty) have been breached.

The body of the statement should also address the following points, some of which can be included in a quote from Therese Chambers: (a) tell customers that they do not need to use CMCs for motor finance claims, and that they will give up a proportion of any compensation if they do; and (b) warn customers of the Firm that they may have entered into an agreement with the Firm on the basis of a misunderstanding (due to the Firm’s marketing) as to the level of redress they will receive and their options to pursue a claim, and that they may wish to consider what options are available to them.

… consumers of the Firm who have already been onboarded may have been influenced in agreeing to use the Firm’s services (and giving up a portion of any compensation they receive) by shortcomings in the Firm’s marketing (eg. around the level of compensation they might receive); in addition, non-compliance with mandatory information requirements … means consumers may not have taken a properly informed decision on whether to proceed with the firm (including giving up a proportion of any compensation received to the firm) …

Publicising the Investigation (including the Firm’s name) and explaining the FCA’s concerns in the Firm’s marketing as to the misleading statements it has made in relation to possible levels of redress due to motor finance claimants will help correct the information asymmetry between the Firm and its customers. In doing so, customers will be able to consider (on a properly informed basis) their options, eg. whether they wish to exercise contractual withdrawal/ cancellation rights or to explore an alternative means of terminating the contract. (7) Further, the team notes the Firm’s failure to include in financial promotions certain mandatory information that is important in ensuring that consumers take an informed decision when deciding to enter into an agreement with a CMC … There is therefore a real risk that consumers entered into agreements with the Firm without the benefit of information that may have been material to their decision-making. The proposed announcement should also enable customers so affected to consider their options. (8) The team has considered whether there is some alternative approach that might achieve this objective, and has concluded there is not…

The Firm has engaged in a well-funded and high profile marketing campaign regarding motor finance claims through many different media, including prime-time TV, social media and adverts on public transport … Given the Firm’s substantial marketing budget and the number of consumers it has reached or has the potential to reach, the harm that has arisen or potential harm that could arise from any shortcomings in the conduct of the Firm may be substantial. Identifying the Firm as the subject of the Investigation, and explaining the FCA’s concerns that consumers may have been misdirected by the Firm as to the level of compensation they might receive in using the Firm’s services, will assist the Firm’s customers in deciding whether they wish to proceed with the Firm and, if not, to explore their options. A similar point applies in relation to the concerns identified … concerning non-compliance with requirements on mandatory information to be provided to consumers.

Related to the previous point, the team considers that it is important that customers are given the earliest opportunity to consider whether they remain willing to proceed with the Firm on their motor finance claim, given the concerns the FCA has identified as to the level of redress the Firm stated in marketing customers could receive and the failure to comply with mandatory information requirements. If a customer is no longer willing to proceed (and give up a portion of the – potentially lower than previously expected – redress they may receive) in light of those concerns, they can consider their options. Those options might include: cooling-off rights (if available); other contractual termination rights (if any); engaging with the law firm to agree an exit; pursuing a complaint; and/or exploring any non-contractual remedies.

While the FCA has concerns about the CMC sector more generally …, it does not follow that it would be unfair to identify the Firm when publicising the Investigation. As explained above, naming the Firm would (for example) enable its customers to consider their positions and do so in a more effective way than other options that might be pursued.

After discussing the position of the Claimant’s customers, the case team say this (at §5.3(3)): “Further, if consumers believe that such misconduct will be left uninvestigated and without the prospect of formal action where appropriate, they may lose confidence in the services provided to them by CMCs more generally”. The Claimant’s criticisms – as I saw it – are that this does not explain why the investigation is an exceptional investigation for the purposes of an announcement; and nor does this reasoning justify a Naming Announcement compared to an Anonymised Announcement.

The case team refer, throughout the Second Memorandum, to the “less than £950” which the FCA says motor finance claimants will probably receive, per agreement. The Claimant’s criticism – as I saw it – is that this £950 benchmark is based on the very recent Supreme Court judgment in Hopcraft; it could not be a suitable benchmark for reasonable expectations when the advertising under investigation took place.

After saying that no alternative approach would achieve the objective of informing the Claimant’s customers of their options (§5.3(8)), the case team says this:

In the context of desirability and the specified objective of preventing widespread malpractice, the case team makes points about its sector-wide concerns (at §5.3(9)) and then points about this first investigation and underscoring its commitment to address sector-wide concerns (at §5.3(10)). The case team then say this (§5.3(11)): “In those circumstances, identifying the Firm when publicising the Investigation is appropriate”. They go on to say “it will underscore the FCA’s concerns, the need for CMCs to ensure they are meeting regulatory standards, and the potential for intervention if they do not do so”. The Claimant’s criticism, as I see it, is this. The reasoning – even though it says “identifying the Firm” – does not actually engage with why an Anonymised Announcement would not achieve all of these desirable aspects of this specified objective.

In the context of the exceptional circumstances threshold and relevant factors, the team’s assessment refers (at §5.4(6)) to the potential “harm” to the Claimant from a Naming Announcement. Having identified the heads of potential prejudice, the case team then says “however” and refers to features of what is already known in the public domain about the Claimant, including the VREQ on the FCA’s register. The Claimant’s criticism, as I see it, came to this. There is a mismatch. It results in an understatement of prejudice. The mismatch is because the case team’s “however” features do not undermine the prejudicial nature of the Naming Announcement, in the context of a potentially lengthy investigation.