Sentinel said its payout figures were representative of what it believed clients could get through the court, and that it had already achieved wins above the FCA’s figure.
The SRA has so far taken no action against any law firm involved in soliciting car finance, though it has opened investigations into 71 firms.
But enforcement action is the CMC sector, which helps solicitors find car finance clients, suggests it is something of a wild west. The FCA has taken down over 800 misleading adverts, including ones featuring consumer champion Martin Lewis without permission. It has also forced three CMCs to reduce their unreasonable fees and blocked four more from taking on new clients.
“We have concerns about the bad actors in this space. They don’t help us or anybody else,” says a senior figure at one claims law firm that has itself reported rivals for misleading advertising.
The FCA said that if drivers chose to go to a law firm or CMC company for compensation “they must be able to trust those firms to act in their best interests”.
In January, the FCA took the unprecedented step of publicly announcing an investigation into the Claims Protection Agency (TCPA), which promised to recover thousands of pounds for victims of alleged car finance mis-selling in adverts featuring heavyweight boxer Tyson Fury. The watchdog said it had “concerns about its advertising and sales tactics in relation to potential motor finance claims”.
The Claims Protection Agency said: “We have fully co-operated with the FCA in relation to its investigation, which we believe will exonerate our position. We wish to reassure consumers that we are fully able to continue to manage their compensation claims.”
TCPA received funding from Katch Investment Group, a London-based boutique hedge fund. Katch wound down its litigation fund last year but past years suggest it was a highly profitable business. It reported a return of 19.1pc on parts of the fund in 2023, the last year that accounts were available.
Katch also provided funding to Consumer Rights Solicitors, which is heavily involved in motor finance litigation and PPI litigation. The law firm makes no mention of the existence of the FCA’s redress scheme on its website, saying only that it is “expected in 2026 at the earliest”.
Katch Investment Group and Consumer Rights Solicitors did not provide a response to a request for comment.
The City watchdog and the SRA have launched a joint taskforce to crack down on poor practice in motor finance claims.
It is not just advertising that is concerning the two regulators. Lenders have seen numerous instances of the same customer being claimed by multiple firms simultaneously, something regulators have told companies not to do.
In one case, 21 different CMCs and law firms were all representing the same client, vying for a share of a single redress payment.
Even as law firms and CMCs scramble for a slice of the motor finance payouts, the end of the scandal appears closer than ever.
Yet for these businesses, there will always be other scandals to pursue. In fact, the motor finance mis-selling scandal has its roots in the last big payday.
After PPI, law firms looked to other areas where such “unfair relationships” might have existed, leading them to motor finance. No doubt there will be another scandal around the bend – at least in the eyes of the claims industry.