UK banks once feared a army of claims management companies that extracted £50bn from the payment protection insurance scandal and pushed the £9bn motor finance battle. These firms, helping consumers seek compensation, have seen their influence wane as regulations tighten. The Financial Conduct Authority now targets aggressive marketing and unfair contracts, with the sector shrinking from over 3,000 firms to just 395 today.

Years of regulatory pressure have stripped the wild-west market of many operators. The Financial Ombudsman now charges professional complainants to deter low-quality submissions, while the FCA makes it easier for customers to claim directly without intermediaries. Banks save over £500 per complaint when CMCs flood the system with repetitive claims, a cost that once battered balance sheets and dragged down valuations versus foreign peers.

Despite the crackdown, surviving claims managers hunt for fresh scandals. The remaining 76 under investigation by the Solicitors Regulation Authority show some activity has shifted to law firms. Yet the core message to banks is clear: compliance isn't optional. As long as customers are treated fairly, the CMC threat fades. But if banks misbehave, even a diminished sector can still exact a price.