Martin Milliner of LV= says CMCs have gotten away with unscrupulous activities “for too long”
Claims management companies (CMCs) must do more to ensure their promotions do not mislead potential customers, according to the Financial Conduct Authority (FCA).
The FCA took over regulation of CMCs in April this year, and since then, it has reviewed over 200 adverts and found widespread poor practice.
As a result, the FCA is introducing several new rules for CMCs when they want to advertise their business.
Those rules are:
- Identify themselves as a claims management company
- Prominently state if a claim can be made to a statutory ombudsman / compensation scheme without using a CMC and without incurring a fee
- Include prominent information relating to fees and termination fees which the customer may have to pay if a firm uses the term ‘no win, no fee’ or a term with similar meaning
’We won’t hesitate to take action’
Jonathan Davidson, executive director of supervision – retail and authorisations at the FCA, said: “Many CMCs play a significant role in helping consumers to secure compensation. But CMCs using misleading, unclear and unfair advertising practices to get business is completely unacceptable. We won’t hesitate to take action where we consider that customers are being misled or otherwise treated unfairly by poor advertising.
“Firms should also understand that we will take their compliance with our rules on financial promotions into account when considering applications for full authorisation.”
’Leaving customers high and dry’
LV= claims director, Martin Milliner welcomed the new measures, stating that some CMCs had gotten away with unscrupulous activities “for too long”.
He said: “It’s good to see the FCA clamping down on claims management companies.
“For too long, there have been some who have got away with unscrupulous activities and we’ve even seen some customers left high and dry on the court steps by the company that’s meant to be representing them after they realise the case will be lost and they won’t get any money, leaving customers with hefty legal fees.
“With the FCA intervening, customers will no longer be misled and we should hopefully see an end to these sorts of unfair practices.”
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