The FCA will take over regulation of CMCs from April 2019
The FCA has said it wants CMCs to be ”trusted providers of high quality, good value services that help customers pursue legitimate claims for redress, and benefit the public interest.”
The regulator said it will focus on three major areas to regulate.
These three areas are:
- Customers – wanting customers to be empowered and confident in choosing a value-for-money service which is appropriate for their needs.
- CMCs – wanting CMCs to help customers get redress in a way that complies with FCA rules and requiring them to meet a common set of standards.
- Regulatory – regulating in a way that prioritises high standards of conduct, protects consumers and improves public confidence in claims management services.
Proposals included regulating Scottish CMCs, requiring all CMCs to record their phonecalls in a bid to cut out cold calling.
Changes to previous proposals included mandatory advertisement of termination fees by lead generators, reducing the amount of information CMCs need to set out on the services they will provide, and a smaller fee for smaller companies with a turnover of up to £500,000.
Jonathan Davidson, Executive Director of Supervision – Retail and Authorisations at the FCA, said: ”We’re ready to take over regulation on 1 April 2019. The new regime aims to drive up standards in a sector whose reputation has been tarnished by some companies engaging in high pressure selling and by failing to provide clear information on the fees they charge.’
”The new rules will ensure firms are transparent about their estimated fees before the customer signs on the dotted line, and notify customers of free statutory ombudsmen or compensation schemes. It’s vital that customers have the information they need to make informed decisions. We will take action against those that break the rules.”
In addition, all firms have to record and retain customer telephone calls for a year after their final contact with a customer.
The next major milestone for firms starts in January. That’s when CMCs can apply for a ‘temporary permission’ to operate. This will allow them to continue operating until they are fully FCA-authorised during one of two waves running from April until the end of July.
“Firing both barrels”
Martin Milliner, LV= GI Claims Director, said: “The new FCA rules should ensure that CMCs are held accountable to higher standards in future, and maximum ICO fines of £500k will stop slippery cold-call bosses avoiding punishment. The regulators are firing both barrels to quash a practice which has made many peoples’ lives a misery for years, so we fully support the largest fines for directors found to be falling foul of the law.”