The organization highlighted practices that could compromise the integrity of client representation
The Solicitors Regulation Authority (SRA) in the UK has issued a warning to law firms involved in the mass claims sector, specifically those handling mis-selling compensation claims related to financial products, The Law Society Gazette reported.
In a newly released warning notice, the SRA expressed unease about law firms beginning to take action and incur costs without obtaining clear consent from their clients. The regulatory body highlighted concerns over certain practices that could compromise the integrity of client representation.
This development comes amid increasing reports of car finance agreements arranged at unreasonably high interest rates, which are anticipated to trigger a fresh wave of mis-selling claims.
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The SRA's warning underscored the importance of law firms maintaining diligent client onboarding processes. The authority has identified a worrying trend of poor due diligence that results in the progression of low-quality or inaccurate claims. Additionally, firms have noted failures to act promptly or adequately according to client instructions.
This warning and the accompanying guidance were formulated following discussions with the Financial Conduct Authority and the Financial Ombudsman Scheme. They aim to address the initial concerns and broader issues, such as the interaction with third parties, the structuring of charges, and the specific responsibilities involved in explaining after-the-event insurance in no-win, no-fee cases.
The SRA emphasized the overarching obligation of solicitors to treat their clients as individuals rather than merely as part of a group. This includes clear communication, a thorough assessment of each specific case, and obtaining informed consent before any action is taken on behalf of a client.
Paul Philip, chief executive, said, “As demonstrated by the various warning notices we have issued in past years, how mass claims are handled is a topic which regularly causes us, and other others such as the FCA, concern.”
Philip further said that 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,” Philip added.