Law firms working on financial product mis-selling compensation claims have been warned about their potential approaches and the need to uphold their professional obligations. In a warning notice today, the Solicitors Regulation Authority said it is particularly concerned about firms acting without proper instructions from clients.
Publication of the warning notice, and wider guidance for those working in the mass claims sector, follows discussions with the Financial Conduct Authority and the Financial Ombudsman Scheme.
Reports of car finance being arranged at unreasonably high interest rates are expected to prompt a new surge in mis-selling claims. This has heightened existing concerns about certain improper practices already being experienced by some members of the public, the SRA said. It cited reports of:
- firms starting to act, and generating costs, before gaining a client’s consent
- poor due diligence during client onboarding leading to low quality and/or inaccurate claims being progressed
- failures to act promptly or adequately in response to client instructions.
The new guidance covers all of these issues, as well as wider areas such as working with third parties, levels of charges, and specific issues including the need to explain to clients the nature of after-the-event insurance used in no win, no fee cases, the SRA said.
Paul Philip, chief executive, said: ‘As demonstrated by the various warning notices we have issued in past years, how mass claims are handled is a topic which regularly causes us, and other others such as the FCA, concern.
‘Whichever mass claims area they are working in, solicitors’ obligations are very clear. We expect the profession to treat clients as individuals, not just a number within a group. This means, for example, communicating with them clearly, giving them a proper assessment of their specific case and related decisions to be made, and asking them for consent before taking any actions in their name. Basically, making sure they adhere to their overall obligation to act in their clients’ interests at all times.’
The guidance on mass claims can be found here, while the warning notice on financial product mis-selling can be found here.
