Claims Standards Council to become a trade body
The government has rejected the Office of Fair Trading (OFT) as the regulator of claims management companies (CMCs), sources close to the government said this week.
The publication of the Boleat Report, which was commissioned to look at the Claims Standards Council's (CSC) suitability for the role, led to widespread speculation about the OFT becoming the regulator.
But sources said it has been ruled out of the race along with the FSA.
It is understood that the new regulatory body will draw on the experiences of all stakeholders in the industry, including the OFT, the
Law Society and the FSA.
The government is thought to be on track to have a regulatory body running by its self-imposed deadline of October 2006.
Meanwhile, the CSC is to become a trade body after the government rejected it as the statutory regulator of CMCs.
The CSC said it would back strict regulation of its members, and threatened to blow the whistle on any cowboy traders to the new regulator.
Andy Wigmore of the CSC said: "We expect our membership to follow our regulations. If they don't, we will tell the regulator.
"If our members abuse the regulations we will be the first in line to come down on them like a ton of bricks."
The CSC plans to set up a complaints mechanism for consumers concerned about the tactics of rogue CMCs in a bid to cut those companies out of the industry.
Wigmore said he expected a raft of CMCs to leave the sector after government regulations came into place.
"Many of our members won't be members in 12 months time, because they won't be able to jump through the regulatory hoops," he said.
"The warning is that they will have to clean up their act if they want to be approved by the regulator."
Wigmore added: "Some of them may not even bother being in the industry any more."
