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Law firms must ensure proper client consent following SRA mass claims warning
28 May 2024, 10:12 am
Recently published comments from the UK’s Solicitors’ Regulation Authority (SRA) should be welcomed by well-run firms while warning others about a number of concerns, from poor due diligence to failure to obtain proper client consent, an expert has said.
The SRA issued a warning notice earlier this month in relation to the professional conduct of claimant law firms working on mass claims against financial services organisations.
It comes amid SRA concerns that the sector could face a new surge in complaints in light of reports of mis-sold inflated interest rates on car finance. The warning reminds firms of the need to uphold professional obligations while ensuring proper approaches to mass claims.
The warning notice highlights concerns of improper practices already experienced by some members of the public. This includes firms acting, and generating costs, before gaining proper consent to actually raise a claim and act on behalf of a client. The SRA highlighted that it is not acceptable for solicitors to make a subject access request for a copy of a client’s personal data held by a financial services provider, even as part of bulk exercises, if they have not first taken necessary steps to identify each individual client.
Further issues include poor due diligence during client onboarding, risking inaccurate claims being raised or leading to low quality of claims progressed. Firms have also been found to be acting inadequately, failing to act promptly in response to client instructions.
Colin Read, financial services regulatory expert at Pinsent Masons, said: “The SRA’s comments about law firm behaviours and the improvement they are seeking will chime with many financial services businesses. Well-run firms should welcome the SRA’s focus especially about ensuring clients consent to steps being taken in the litigation in their name.”
Alongside the warning notice, the SRA published new guidance (18 pages / 284 KB) on claims management activity. The new material combines previous guidance on areas such as claims for mis-sold payment protection insurance (PPI), holiday sickness, and personal injury.
The warning notice and wider guidance follow discussions between the SRA, the Financial Conduct Authority (FCA) and the Financial Ombudsman Scheme (FOS).
“Compliance with the SRA rules and guidance should limit flawed inflation of claimant numbers by law firms by requiring them to provide clear evidence that they truly ‘know their client,” said Read.
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