Law firms handling financial product misselling compensation claims have been warned about potential issues in their approaches and the necessity to uphold professional obligations. Concerns have been raised about firms obtaining proper instructions from clients and supervising staff appropriately in high-volume or bulk claim processes. This warning follows discussions with the Financial Conduct Authority (FCA) and the Financial Ombudsman Scheme (FOS).
The sector may face a surge in complaints, particularly regarding car finance arranged at higher interest rates than necessary. This amplifies existing concerns about improper practices in the mass claims sector, such as firms initiating actions and incurring costs without client consent, poor due diligence during client onboarding leading to low-quality or inaccurate claims, and failures to respond promptly or adequately to client instructions.
The newly published guidance addresses these issues and other areas such as working with third parties, fee levels, and the necessity of explaining after-the-event insurance in no-win, no-fee cases. It consolidates previous guidance and warnings on mis-sold payment protection insurance, holiday sickness, and personal injury claims.