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UK regulator warns claims companies over poor practices

Claims management companies risk losing their UK licences or other penalties if they are found to have misled customers through questionable advertising, the Financial Conduct Authority (FCA) has warned.

The regulator issued the warning after its review of more than 200 advertisements, including those placed on social media sites by claims management companies, found widespread poor practices.

Examples of bad practices include claims management companies failing to identify themselves and giving customers the impression that only they could secure higher compensation payouts.

“Many play a significant role in helping consumers to secure compensation,” Executive Director of Supervision Jonathan Davidson said. “But claims management companies using misleading, unclear and unfair advertising practices to get business is completely unacceptable.

“We won’t hesitate to take action where we consider customers are being misled or otherwise treated unfairly by poor advertising,” he said.

“Firms should also understand that we will take their compliance with our rules on financial promotions into account when considering applications for full authorisation.”