The FCA has launched a formal market review into the claims management market. This article explains what the FCA is looking at, why it matters now, and how firms should respond.
On 6 May 2026, the FCA opened a formal market review into claims management companies and law firms operating in the financial services claims market. The review is being conducted jointly with the Solicitors Regulation Authority. While the motor finance mis‑selling exercise triggered the review, its scope is broader. The FCA’s language makes clear this is not limited to one product line or claim type. This is not a thematic review. It is not a discussion paper. It is a targeted investigation with enforcement and legislative consequences already flagged.
What the FCA is Looking At
The FCA has identified a clear set of conduct concerns driving the review:
- Consumers signed up without clear, informed consent, including through social media tick-boxes and in some cases signed with multiple CMCs for the same claim without realising it
- Aggressive and misleading marketing, including advertising practices that overstate the likelihood or value of claims
- Unfair fee structures and exit charges that trap consumers once they have engaged
- Operational and financial resilience weaknesses, the FCA is looking at accounting and audit practices, not just front-end conduct
- Lead generators explicitly in scope, the FCA is following the chain from initial contact through to claims resolution
Housing disrepair is also called out alongside motor finance. The pattern is consistent: high-volume, consumer-facing claim types where CMC practices have drawn regulatory attention. The FCA has said it will use enforcement action where it finds harm and has signalled it may seek legislative powers to impose stronger compensation mechanisms against CMCs and law firms. Further details are expected in mid-May.
Why This Matters Even If You Have Not Heard from the FCA
CMC compliance teams have spent much of the past two years focused on motor finance redress administration, and understandably so. But the conduct issues the FCA has identified in its review are not unique to motor finance. Consent processes, marketing practices, fee structures, and lead generation relationships are firm-wide issues. If any of these have not been formally reviewed and tested against CMCOB requirements recently, the market review creates both a risk and an obligation to act.
The FCA has confirmed it will look at firms it regulates and those authorised by other bodies. Lead generators, often treated as a supply chain rather than a regulated function, are explicitly included. If your firm uses third-party lead sources, the question is not just whether your own practices are compliant, but whether you can demonstrate oversight of those relationships.
The Two Risks Firms Are Facing
There are two distinct risk positions for CMCs right now.
The first is proactive risk, firms that have not been contacted by the FCA but whose practices, if examined, would not withstand scrutiny. The window for these firms to identify issues, remediate them, and create an evidential trail of self-correction is now open. It will not remain open indefinitely.
The second is reactive risk, firms already in FCA contact, whether through a supervisory letter, a Section 165 information request, or a voluntary requirement. For these firms, the quality and credibility of the response they provide in the coming weeks will materially affect how the FCA classifies the level of risk they represent. A well-structured, substantive response that demonstrates genuine understanding of the issues and a credible remediation plan is a different regulatory conversation than a firm that appears to be managing optics.
How Thistle Initiatives Can Help
Thistle Initiatives has direct experience working with claims management businesses under active FCA scrutiny. We have supported firms through supervisory reviews, Section 165 responses, voluntary requirement compliance, and remediation design. We know what the FCA looks for, how supervisory conversations develop, and what separates a firm that gets through a review from one that does not. We offer two service lines for CMCs and connected firms in the current environment:
- CMC Conduct Assurance Review - an independent assessment of your marketing, consent, claims handling, fee structures, and oversight arrangements against FCA and CMCOB requirements, with a prioritised remediation roadmap. Available as a targeted Healthcheck or a full Conduct Audit, depending on your needs and timeline.
- Regulatory Response Support - experienced compliance expertise for firms already in FCA contact, working alongside your legal advisers to provide root cause analysis, remediation planning, attestations, and credible responses to supervisory questions. Where remediation requires operational change, Thistle's TORI practice brings change and transformation capability to the engagement.
Additionally, Thistle is appointed to the FCA’s Skilled Person panel, allowing us to also conduct Section 166 reviews. We are not a law firm. We complement legal advisers, we do not compete with them. And we are sized for the CMC market, not Big Four cost, but with the sector depth and FCA regulatory experience to provide credible, expert support. If you want to understand your regulatory exposure or if you have already received an FCA contact and need experienced support alongside your legal team, we would welcome a confidential conversation.
Meet the Expert
Nikki Bennett, Partner 
Nikki Bennett has re-joined Thistle Initiatives as a Partner in the Insurance team, working alongside Matthew Williamson. Formerly Managing Director at UKGI, she brings extensive expertise in Delegated Authority markets, MGAs, InsurTech and product development, with a proven record of delivering practical, solutions-driven outcomes for insurance firms. Nikki also continues to serve as a Director at the Association of Professional Compliance Consultants (APCC).