The Financial Conduct Authority will proceed with a public investigation into a claims management company after seeing off a High Court challenge to its naming by the regulator.
The City watchdog said it will probe The Claims Protection Agency Limited (TCPA) about the sign-up process for motor finance customers and what they were told about the redress they could expect.
The announcement follows rulings from Mr Justice Fordham, published last Friday, dismissing the company’s claim for judicial review of the FCA’s approach.
TCPA, which trades under names including My Claim Group and Karen’s Claims, said on its website it was taking a ‘short pause’ to update its advertising and sign-up processes.
The investigation comes amid a tug-of-war between the FCA and CMCs which supply law firms with motor finance cases. The regulator has spent millions advertising its new lawyer-free compensation scheme for those who paid unfair commissions when they took out finance to buy a car. However, CMCs continue to advertise for consumers to use them to access the scheme.
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In a statement, the regulator said: ‘The FCA is investigating what customers were told about the amount of redress they might obtain, whether they were told they could make a claim for free, and whether they were pressurised to sign up. Announcing the investigation allows TCPA customers to consider their options. The FCA has not reached any conclusions on whether TCPA breached any regulatory requirements.’
TCPA was notified of the intention to open enforcement proceedings last September and applied to the court to review the decision a week later. The High Court dismissed the firm’s application in October and the firm was refused permission to appeal by the Court of Appeal just before Christmas.
Mr Justice Fordham revealed that TCPA had been one of 18 regulated claims management companies operating in the motor finance sector asked to review their marketing and promotions. The FCA subsequently decided to bring an investigation against the company, which included a recommendation that it be identified. The company said the decision to make a naming announcement was unlawful and/or unreasonable.
In CIT, R (On the Application Of) v The Financial Conduct Authority (No.1), the judge criticised aspects of the FCA’s reasoning and said some of it ‘can be said to be weak’. But viewed as a whole, the process or outcome was not unreasonable.
In a statement on its website, My Claim Group said: ‘We’re currently making updates to our advertising and sign-up processes. As part of this, and in agreement with the Financial Conduct Authority, we have temporarily paused new customer sign-ups while these improvements take place.’
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