Regulators have warned law firms working on financial product mis-selling claims not to breach their professional obligations
In a warning notice, the Solicitors Regulation Authority (SRA) expressed concern about improper practices in the mass claims sector, including ‘firms starting to act, and generate costs, before gaining a client’s consent’, ‘poor due diligence during client onboarding leading to low quality and/or inaccurate claims being progressed’, and ‘failures to act promptly or adequately in response to client instructions’.
The SRA said its existing concerns have been heightened by recent attention on the potential for mass claims over car finance customers being charged too much interest, which the Financial Conduct Authority (FCA) is currently investigating.
In particular, the SRA is ‘particularly concerned about potential issues regarding firms getting proper instructions from clients and supervising staff in relation to financial services claims when part of high-volume/bulk claim processes involving multiple clients’.
SRA guidance issued alongside the warning notice covers the areas of concern as well as wider areas such as working with third parties and levels of charges.
Paul Philip, SRA chief executive, said: ‘How mass claims are handled is a topic which regularly causes us, and 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.’
