Claims Management Companies to be regulated by the FCA – how can CMCs comply?
As of 1 April 2019, Claims Management Companies (CMCs) are regulated by the Financial Conduct Authority (FCA), the independent watchdog that regulates financial services in the UK. We’ve put together a synopsis of what this means for you, what enforcement action can be taken by the FCA if you don’t comply, and how we can help you to comply.
How this affects you
Following a government review into concerns about misconduct by some CMCs, all existing and new CMCs must comply with the standards set by the FCA as of 1 April 2019. The regulation of CMCs is transferring from the Claims Management Regulator, part of the Ministry of Justice, to the FCA.
This means that any CMCs looking to start out must first apply to the FCA for authorisation, while many existing ones must register for “temporary permission” to continue operations while the process of authorisation is carried out.
What enforcement can be taken against firms who don’t comply
The FCA has a range of powers it can use against those that don’t comply with the rules.
In the main these include;
- Requiring a company to implement changes to the business practices, while being closely monitored by the FCA to ensure that any shortfalls are remedied.
- Enforcement Action, such as withdrawing the permissions from the Business, issuing hefty fines, etc. and in limited circumstances the directors may face criminal prosecution.
What the new FCA requirements include
The new requirements include:
- Due diligence on lead generation and rules to prevent firms encouraging customers to make fraudulent, frivolous, or vexatious claims, or claims which have no good basis.
- Providing clear, upfront information to customers about the fees they charge and the services they will provide.
- Giving customers a summary document about the services they will provide before the customer signs a contract.
- Giving customers details of no-cost alternative resources such as the Financial Ombudsman Service (FOS) or the Financial Services Compensation Scheme (FSCS), which should be included in any marketing or advertising they conduct.
- Recording and retaining customer telephone calls for a year after their final contact with a customer.
How Richdale Consultants can help
At Richdale Consultants, we are an experienced and personable team of compliance officers who are well respected within the FCA compliance sector. Our team is well versed in all aspects of the FCA application processes, and the ongoing regulation of firms, whether they are Directly Authorised or Appointed Representatives.
Our services include applying to the FCA for on behalf of clients who wish to be Directly Authorised, and for those who or are not yet ready or do not wish to be Directly Authorised, the opportunity to join us as an Appointed Representative of Richdale. We will then support your business with all your compliance needs on every step of the way as your business grows.
Whether you are an aspiring CMC, or have been in the business many years, we will advise you how to comply with all the various FCA regulations that apply to your circumstances. This will in turn free up your valuable time to focus on building and conducting your business efficiently and profitably.
Feel free to get in touch with us today, for a free initial consultation to get started on your compliance journey. We look forward to hearing from you, and to being of assistance to you in your compliance journey.