Category: CMC

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HM Treasury proposes to give the Ombudsman the power to impose case fees on professional representatives making complaints

On 5 December 2023, HM Treasury published a Policy Note setting out its proposal to make a statutory instrument (together with a draft statutory instrument) giving the Financial Ombudsman Service the power to impose charges on professional representatives (including solicitors, barristers and claims management companies) making complaints to the Financial Ombudsman Service.

If the draft statutory instrument is laid before Parliament, it will be subject to the usual parliamentary process. If made in the form of the draft, it will allow the Financial Ombudsman Service to decide the circumstances when a professional representative will be responsible for paying a case fee (at the moment only a respondent can be responsible for a case fee).

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FCA urges Claims Management Companies and High Cost Lenders to work better together

On 31 March 2021, the UK Financial Conduct Authority published a news story encouraging claims management companies (‘CMCs’) and high cost credit lenders (‘HCC lenders’) to work better together.

The FCA is aware of:

– some CMCs having presented a claim to a HCC lender where the customer had never taken out a loan with them;

– some HCC lenders suspending lending whilst the complaint is being investigated;

– some CMCs using ‘catch all’ letters of authority; and

– some HCC lenders being unwilling to share information efficiently.

The FCA has reminded CMCs that:

– they must not make or pursue a claim if they have reasonable grounds to suspect the claim does not have a good arguable base or is fraudulent, frivolous or vexatious;

– they should take “all reasonable steps to investigate the existence and merits of each element of a potential claim” before making or pursuing a claim; and

– their investigations should enable them to make representations when presenting a claim which: (i) substantiate the basis of the claim; (ii) relate to the nature of the claim and are specific to the claim; and (iii) are not false, misleading or an exaggeration.

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FCA publishes ‘Dear CEO’ letter to claims management companies

On 26 October 2020, the UK Financial Conduct Authority published a ‘Dear CEO’ letter to claims management companies. This states that the FCA has “identified, and continues to identify, issues” including:

– misleading, unclear and unfair advertising;

– poor disclosure of pre-contractual information about fees and/or the availability of free alternatives;

– unclear fee structures (including the fact that “a CMC’s fee will significantly reduce the amount of redress they might otherwise receive“;

– poor service standards (including advice);

– failing to undertake sufficient checks and collect relevant information before presenting claims;

– certain CMCs having been established by, or having close associations with, individuals at previous firms involved in misconduct (including mis-selling of financial products); and

– some CMCs have been looking to use existing data to recycle and re-market claims, leading to nuisance calls.

The FCA concludes that “many CMCs have demonstrated a poor understanding of, and sometimes attitude to, their regulatory obligations“.

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FCA issues final notice to claims management company seeking authorisation

On 29 January 2020, the UK Financial Conduct Authority published a final notice given to FS Claims Limited (a firm applying for authorisation for claims management activity).

The FCA decided the application was incomplete and, given the failings to provide further information it had asked for, the FCA did not consider the applicant could meet the threshold conditions in the Financial Services and Markets Act 2000.

This is a clear indicator from the FCA that the application process for claims management companies will not be easy.

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Financial Conduct Authority imposes first fine on a claims management company

The UK Financial Conduct Authority (FCA) has published a final notice fining a claims management firm, Professional Personal Claims Limited (PPC), £70,000 for misleading information published on its website and in printed materials. 

In summary, PPC:

– had used the logo of five major banks which the FCA said was likely to mislead its customers into believing they were submitting claims directly to the banks; and

– was sending generic and factually identical complaints to the banks when evidence specific to each client should have been presented.

The FCA has also published a press release.

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Claims management companies become regulated by the Financial Conduct Authority

On 1 April 2019, the UK Financial Conduct Authority took over regulation of claims management companies (CMCs) in England, Wales and Scotland. CMCs had previously been registered by the Claims Management Regulator (a part of the Ministry of Justice). The FCA has issued a press release stating that more than 900 CMCs have registered for a temporary permission while they apply for authorisation from the FCA.

The FCA has also published a webpage on using CMCs.