Dealers urged to check legitimacy of motor finance claims management companies

By automotive-mag.com 3 Min Read

Dealer law firm Motor Industry Legal Services (MILS) is advising dealers to check that claims management companies raising complaints or subject access requests on motor finance are authorised to do so by their client.

It said if a solicitor or claims management company cannot provide a letter of authority, then there is no obligation to respond.

Earlier this month the Solicitor’s Regulation Authority (SRA) issued a warning regarding the actions and business practices of some of these firms including law firms acting for clients without their knowledge or consent, poor due diligence leading to low quality and/or inaccurate claims

The SRA was concerned with the behaviour of firms launching high-volume/bulk claim processes that involve multiple clients. Full details of the SRA warning may be found here.

MILS is encouraging dealers to report such claims as the SRA warning now means that such tactics are under full and proper scrutiny and solicitors and claims management companies risk professional sanctions if they do not comply.

“This will be welcome news for dealers since the business models of the solicitors and claims management firms concerned rely on high volume and low costs to be commercially viable, and a requirement for increased checks and administration on each individual claim can only reduce the profitability of these businesses and therefore reduce the incentive to put forward many of these complaints.

“The SRA’s warning should also provide a glimmer of hope, in that the authorities are finally recognising that the increase in complaints regarding discretionary commissions has been partly driven by the actions of solicitors and management companies, and not always consumer concern over wrongdoing.  It will be interesting to see how this feeds into the ongoing FCA review of commission claims.”

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