This article is for general information only. It is not financial advice and does not recommend a specific lender or product.

Are claims management companies worth using for financial complaints?

The Financial Conduct Authority (FCA) has raised concerns about whether the claims management market is working fairly for consumers in financial difficulty. The FCA's concern centres on how some claims management companies (CMCs) have handled complaints, particularly in the car finance sector, and whether they are making already difficult situations worse rather than better.

Key points from the FCA's assessment:

  • Consumers who have been wronged can complain for free through the Financial Ombudsman Service (FOS), the free, independent body that resolves disputes between consumers and financial firms, without using a CMC.
  • Some CMCs charge fees that reduce the compensation a person actually receives.
  • The FCA has raised concerns that some firms handling car finance complaints created extra complications for consumers rather than resolving them.

This article reflects FCA guidance on claims management companies and is intended as an evergreen explainer. Regulatory positions may change; check fca.org.uk for the latest.

Why does this matter if you have a financial complaint?

If you are dealing with debt, a complaint, or a mis-selling claim, you may be approached by or tempted to use a CMC. The FCA's position is that free routes exist, and paid claims services do not always deliver better outcomes. According to the FCA, CMC fees typically range from 15% to 30% of any compensation awarded (FCA: Is the claims management market working?), meaning a significant portion of any award you receive may go straight to the firm rather than to you. In many cases, paying a CMC a cut of your compensation when the FOS route is free will not represent good value, though there may be edge cases, such as highly complex claims or situations where a consumer lacks the capacity to manage a complaint independently, where professional help could be justified.

Before signing anything, a useful first step is to check whether a free route, such as the Financial Ombudsman Service, covers your situation, and to get a clear written breakdown of any fees a paid service would charge.

What risks and checks should you be aware of?

If you are contacted by a company offering to manage a debt complaint or claim on your behalf, it is worth pausing before you commit. Here are some practical things to look into:

  • Check whether the service is free. The Financial Ombudsman Service is free to use. If a company is asking for a fee or a percentage of any award, pause before agreeing.
  • Check the FCA register. CMCs must be authorised by the FCA. You can check at register.fca.org.uk. Dealing with an unauthorised firm carries real risks.
  • Be cautious of urgency. Pressure to act quickly or sign documents fast is a warning sign.
  • If you are already in arrears (meaning you have missed one or more payments on a debt), signing up to a CMC fee arrangement could make your financial position worse, not better. Free debt advice, such as that offered by National Debtline, should come first.

If you are already struggling with debt, the right starting point is usually free, specialist debt advice, not a claims firm.

Who might this apply to?

You may find this article relevant if you recognise yourself in any of the following situations: you have an unresolved financial complaint, particularly around car finance; you have been approached by a company offering to handle a debt or mis-selling claim for a fee; you are in arrears or managing multiple debts and are looking for help; or you are unsure whether the help you are being offered is genuinely free.

Where can you get free debt help?

If you are worried about debt, these services are free and independent:

None of these services charge fees. None of them take a percentage of your money.

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