Strict limits are being brought in to prevent claims management firms keeping excessive amounts of your compensation for themselves.
As things stand, firms can slice off more than 40% of payouts in return for the work they do sorting out your claim.
But the Financial Conduct Authority has now published proposals that could see this cut to just 15% for larger claims.
The FCA's Sheldon Mills said: "When working well, CMCs can provide useful services for consumers.
"However, consumers can experience harm when they do not understand the nature of the service CMCs provide and where they are charged excessive fees."
Martin Lewis praised the plans, tweeting: "Wow. Good to see the regulator the FCA has just proposed a cap on Claims Management firms fees - it says the cap will be 15% - 30%.
"Definitely the right move. For me cost should depend if firm doing real work (eg taking firms to court in test cases) and those just form filling."
The proposed limits are:
- Payout: £1 to £1,499; maximum fee 30% (£420)
- Payout: £1, 500 to £9,999; maximum fee 28% (£2,500)
- Payout: £10,000 to £24,999; maximum fee 25% (£5,000)
- Payout: £25,000 to £49,00; maximum fee 20% (£7,500)
- Payout: £50,000 and above; maximum fee 15% (£10,000)
The FCA gave the example of one couple who used a claims management firm to get money back on a mis-sold investment.
They signed an agreement to pay a 48% fee - seeing £27,000 of their compensation go to the claims firm.
Under the new rules, that would be cut to 15% of the payout, seeing them £17,000 better off.
The cap will apply to all claims where a people win money back, apart from PPI claims that are capped by at 20% Parliament already.
"We estimate that the proposed cap on fees could save consumers around £9.6m a year," Mills said.
The consultation is open until 21 April 2021. A policy statement is expected to be published in Autumn 2021.
