If you've made a PCP or motor finance claim, you may have been tempted, particularly after any period of perceived inactivity, to sign up with a second, or even third, claims company or law firm "just in case." This practice is becoming more common across Motor Finance Claims and has the potential to cause serious financial problems to those who instruct more than one legal representative as well as derailing any likely settlement in the case..
What is duplication?
Duplication happens when a client instructs more than one law firm or claims management company (CMC) to pursue the same claim. As a general rule, you can only be represented by one legal representative at a time. Instruct several, and each one will be pursuing the same complaint against the same lender on your behalf. This creates additional work for the banks and delay. It also means that you have more than one professional expecting payment from any compensation money you might recover.
Why it matters
Every time you sign a legally binding no win – no fee agreement with a law firm, you take on a liability to pay them if the case succeeds – this is typically around 30% of any compensation. Most agreements also carry with them cancellation fees. With PCP compensation often estimated at no more than £825, instructing multiple firms for the same claim could mean the same number of separate fee liabilities, and cancelling any of them after the 14-day cooling-off period could trigger charges that could ultimately dwarf the payout itself.
What people wishing to claim compensation for their PCP agreements should also be mindful of is that not every claim will prove successful. But if you cancel an agreement with a firm after 14 days, most are entitled to charge you for the work they have already done or a cancellation fee regardless of the outcome of your claim. This could mean you are significantly out of pocket for having instructed more than one representative and then attempting to cancel.
Law firms have the right to exercise an "equitable lien" or charge over compensation due to a client. This works when a 3rd party (such as a bank) holds funds that are due to be paid to the person who owes the law firm money. If that law firm has done work that significantly contributes to the recovery of those funds, they can put the bank on notice of their lien – which means that even if a bank pays you directly, the firm you instructed can still pursue the bank for its fee.
In practice, this means that once a bank is on notice as to a solicitors equitable lien, it will not be able to pay the full compensation to the client – even where the client has changed their mind and decided to complete the claim without the help of legal representation. The banks will either pay compensation net of this fee (so the client has not saved anything by cancelling their contract and may have lost out if there is more than one solicitors fee to pay) or they could refuse to pay out until every firm that has been instructed has agreed to release its entitlement to a fee, delaying your compensation and reducing what you might ultimately receive. If your name ends up on more than one court claim for the same matter, you could also face adverse costs running into thousands of pounds.
Avoiding the trap
At Johnson Law Group, we want to ensure all our clients are 100% clear about what they are signing up for when they instruct us to represent them.
We recommend:
- Checking your inbox before signing up anywhere new. Search for "PCP" or "car finance claim" to see if anyone is already acting for you.
- Being wary of cold calls. Never confirm existing representation details to an unsolicited caller - this is a common tactic used to fraudulently take over an existing claim.
- Chasing your existing firm rather than instructing a new one. With millions of claims in the system and banks not yet processing payments at scale, delays are the norm, not a sign your claim has been dropped. It should certainly not be taken as a sign that your representative is not doing anything.
- Decide before you instruct, not after, whether you want to run the claim yourself or use a representative. The FCA has indicated only around 45% of claims will succeed – so cancelling contract with a representative not winning your case, but may cost you a fee regardless.
- Contacting us, If you think you’ve accidentally signed up with more than one law firm. We will always do our best to help. There’s a possibility of an “amicable release” if you can explain that you made an honest mistake.
Delay to the FCA Redress Scheme is driving more duplication
As the promised FCA Car Finance Redress Scheme continues to be delayed, frustration could be driving more claimants toward duplication. We’re working with other firms on a "Duplication Charter," under which signatory firms would waive their fee and lien rights in return for clients nominating a single representative, with banks dealing exclusively with that nominee. The FCA isunderstood to be developing a similar framework. It's early days, but resolving duplication may prove the single biggest obstacle to a smooth redress scheme once it finally launches.
.jpg)
