CMC review is due to be completed by early 2016
Government ministers are looking at proposals for a two-tier system that could cut the profits that spurious claims management companies (CMCs) make on bank mis-selling scandals.
As part of its review into CMCs, the Government is understood to be considering applying a cap on bulk compensation claim fees that would apply to payment protection insurance mis-selling (PPI) and other mass market claims.
The cap would be set at a far lower level than the estimated 30% margin being made by claims management companies (CMCs) from PPI, Sky News reports.
Under the proposals, claims firms would be able to make a bigger margin on so-called specialist claims, where additional work is required to process and administer compensation applications.
The government announced in October that it was taking action to clampdown on rogue claims management companies (CMCs) which provide bad services and are responsible for people being bombarded with nuisance calls.
A call for evidence was launched for a fundamental independent review of the way claims firms are regulated.
This evidence will be used to assess the powers and resources required for a strengthened regulatory regime and will consider what other reforms may be necessary.
The review is due to be completed by early 2016.
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