You Do Not Need a Claims Management Company to Complain About Motor Finance Mis-selling
If you believe your car finance agreement was mis-sold, you do not need to use a claims management company (
CMC). According to the Financial Conduct Authority (FCA), you can
complain directly to your lender for free. The FCA estimates that 12.1 million eligible agreements (FCA, March 2026) by mis-selling between 6 April 2007 and 1 November 2024, with an FCA-estimated average of £829 per eligible agreement per claim (FCA estimate). This guide will walk you through the process of complaining directly to your lender without incurring unnecessary costs.
What is a Claims Management Company?
A claims management company (CMC) is a firm authorised by the FCA to submit complaints on behalf of consumers. These companies typically charge a fee or take a percentage of any compensation awarded, which can range from 15% to 30%, depending on the type of claim and agreement reached with the consumer.
How Much Do Claims Management Companies Charge?
The fees charged by CMCs are often significant. Prior to FCA regulation, some firms took up to 50 percent of any compensation awarded. However, since the introduction of new rules in 2019, these fees have been capped at between 15% and 30% for most claim types (FCA estimate). For example, if a CMC helps you secure £829 in compensation, they could charge anywhere from £105 to £210 based on their agreement with you.
Can You Complain Directly for Free?
Yes, absolutely. The process of complaining directly is straightforward and free:
1.
Write to Your Lender: Start by writing a formal
complaint letter to your lender outlining the issues you have with your car finance agreement. Include any relevant documentation or evidence that supports your claim.
2.
Wait 8 Weeks: After submitting your complaint, wait for up to eight weeks for your lender to respond. During this period, they should investigate your case and provide a response.
3.
Escalate to the Financial Ombudsman Service (FOS): If you are not satisfied with your lender's response or if it takes longer than eight weeks, you can escalate your complaint to the FOS. The FOS provides an independent review of complaints that fall within its jurisdiction.
Advantages and Disadvantages of Using a CMC
Advantages
- Convenience: A CMC may make the process more convenient by handling paperwork on your behalf.
- Expertise: Some CMCs have expertise in dealing with specific types of car finance claims, which can increase your chances of success.
Disadvantages
- Significant Fee: As mentioned earlier, CMC fees can be substantial, reducing the net compensation you receive.
- You Can Do It Yourself for Free: The process of complaining directly to your lender is free and straightforward. You do not need professional assistance to make a successful claim.
- Aggressive Tactics: Some CMCs use aggressive tactics or unrealistic promises to attract clients, which can be misleading.
FCA Regulation of Claims Management Companies
The FCA took over the regulation of claims management companies in 2019 following concerns about unethical practices and mis-selling. Under FCA rules, CMCs must:
- Be authorised by the FCA.
- Comply with strict guidelines on advertising and marketing.
- Charge reasonable fees, as mentioned earlier.
Warning Signs of a Bad Claims Management Company
When considering using a CMC, be wary of these red flags:
- Cold Calling: Since 2019, cold calling to offer claims services is illegal. Any unsolicited contact should be treated with caution.
- Pressure Tactics: Be wary of firms that pressure you into signing up or making immediate decisions.
- Unrealistic Promises: Claims management companies that guarantee a certain amount of compensation are likely exaggerating and should not be trusted.
- Hidden Fees: Ensure there are no hidden costs beyond the agreed-upon percentage fee.
How to Complain Directly to Your Lender for Free
Step-by-Step Guide
1.
Gather Evidence: Collect all relevant documents, including your car finance agreement, correspondence with the lender, and any other evidence that supports your claim.
2.
Write a Formal Complaint Letter: Address the letter to your lender's customer services department. Clearly state the issues you have with the agreement and include any supporting documentation.
3.
Follow Up: If you do not receive a response within eight weeks, follow up with a reminder email or phone call.
4.
Escalate to FOS: If necessary, escalate your complaint to the Financial Ombudsman Service by submitting an online form on their website.
What the FCA Says About CMCs
The FCA advises consumers that while claims management companies can be helpful, they are not essential for making a successful claim. The authority encourages consumers to consider whether the costs of using a CMC outweigh the potential benefits before engaging with such firms. the FCA provides guidance on how to identify and avoid rogue or unethical claims management companies.
Sources and References
- Financial Conduct Authority (FCA). "Consumer Credit Sourcebook: Claims Management Companies." Retrieved from [FCA website].
- Office for National Statistics (ONS) Census 2021.
- Financial Conduct Authority (FCA). "Estimates of mis-sold motor finance agreements." 2024.
Key FCA Figures
The FCA confirmed on 30 March 2026: 12.1 million eligible agreements, £829 average compensation per agreement, £7.5 billion total redress at 75% consumer uptake, and £9.1 billion total cost to firms. The scheme covers agreements from 6 April 2007 to 1 November 2024. Two deadlines apply: 30 June 2026 for post-2014 agreements and 31 August 2026 for pre-2014. Final complaint deadline: 31 August 2027.
You can complain to your lender directly for free. You do not need a claims management company.
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MLJ.org.uk (mlj.org.uk) is a free, independent information service. We are not a claims management company, solicitor, law firm, or financial adviser. We do not handle complaints, process claims, charge fees, or accept any percentage of compensation. This information does not constitute legal or financial advice. You can complain to your lender directly for free. You do not need a claims management company. If your lender rejects your complaint, you can escalate to the Financial Ombudsman Service at no cost. For personalised legal or financial advice, consult a qualified professional.