Mis-sold car loan claims – The New PPI Scandal
Most solicitors will operate under a No Win, No Fee, agreement. So if no compensation is awarded in the case for a mis-sold car loan then the client does not have to pay the solicitors anything. The question therefore is what are the costs a client has to pay in the event the case is won.
The Solicitors Regulation Authority (SRA), the solicitors watchdog , has decided to implement a cap on fees for handling financial service claims, aligning with the existing limits set by the Financial Conduct Authority (FCA) based on the compensation awarded to the client. This decision followed an analysis indicating that law firms in this sector could maintain profitability and viability, offering clients more transparency and assurance on costs.
Despite concerns, the SRA concluded that setting a maximum fee framework would not hinder competition, as the wide range of allowed charges provides enough room for firms to set varied fees within each category.
The Fees for Mis-sold Car Loans
The proposed fee structure mirrors the FCA’s, with charges ranging from a maximum of 30% for claims up to £1,499, decreasing to 15% for claims over £50,000. This structure was broadly supported by consumer groups and financial bodies, though some opposition from the Liverpool Law Society and certain law firms highlighted worries about the impact on the availability of legal services for financial claims.
The SRA plans to regularly review the fee structure, including an exemption for charging higher fees in exceptionally complex cases, pending approval from the Legal Services Board. This initiative responds to the 2018 Financial Guidance and Claims Act, aimed at curbing excessive fees by claims management companies, with the FCA leading the regulatory response due to its extensive experience in the sector.
