Nikhil Rathi (pictured), chief executive of the Financial Conduct Authority, told the Treasury Committee this week he is "concerned about the integrity of the claims management market," as legal challenges continue against the regulator's £7.5 billion motor finance redress scheme.
According to a report from City AM, Rathi described a claims ecosystem spanning lead generators, law firms and claims management companies that he said was largely focused on maximising its own profit, and said he backed a Civil Justic Council recommendation that high-volume claims funders be brought under FCA money laundering registration.
While Rathi's comments centred on motor finance claims firms, a distinct population from the accident management companies and credit hire firms active in motor insurance, they land amid a broader and longer-running complaint from insurers about claims management companies inflating costs elsewhere in the market.
That complaint is borne out in the regulator's own findings: the FCA's 2025 multi-firm review of motor claims found that referral fees paid to credit hire firms and claims management companies were associated with slower claims processing and rising costs, even as it concluded that external cost pressures, rather than insurer profit, were the primary driver of premium increases.
The Motor Insurance Taskforce, whose members include the FCA, HM Treasury, the Competition and Markets Authority and the Association of British Insurers, went further in its December 2025 final report, noting that referral fees were incentivising unnecessary third-party involvement in claims and driving up both cost and dispute volumes.
Average credit hire referral fees rose 29% to £565 in 2023, while disputed non-GTA credit hire claims saw average costs climb from £2,994 in 2019 to £6,367 in 2023. The taskforce recommended the ABI develop a good practice code to reduce referrals and mitigate incentives for claimants to use accident management companies and CMCs, though industry commentators have criticised the report for stopping short of endorsing a credit hire pre-action protocol despite cross-industry support for one.
The motor finance redress scheme adds a further, related front, though a separate one. Rathi's criticism of claims funders and representatives is consistent with concerns the FCA has raised previously about claims management conduct in motor insurance, even though the two fall under different regulatory workstreams.
A joint taskforce involving the Solicitors Regulation Authority, the Information Commissioner's Office and the Advertising Standards Authority has been tackling poor practice among CMCs and law firms ahead of the redress scheme's rollout.
For insurers, the common thread across both fronts is a regulator increasingly willing to name claims intermediaries as a cost and conduct problem in their own right, rather than treating them solely as a channel for consumer access to redress.
