The Government has confirmed that it will press on with tougher policing of claims management companies (CMCs) in the Queen’s Speech.
Through the Financial Guidance and Claims Bill, the Government will transfer the regulation of claims management services to the Financial Conduct Authority (FCA), and move complaints-handling responsibility to the Financial Ombudsman Service. The bill will also hand the FCA the powers it needs to implement a claims management regulatory regime, which will allow it to cap fees that CMCs charge.
James Dalton, director of general insurance policy at the ABI welcomed the bill.
“Confirmation of tougher regulation of claims management companies cannot come soon enough for people who are plagued by unsolicited calls and texts,” he said.
“Disreputable firms are fuelling a compensation culture that contributes to higher insurance costs for many.”
Kieran Jones, a partner at Weightmans, said that an anticipated consultation on the proposed transfer of powers – due to take place in 2018 – would provide the insurance industry with a valuable opportunity to shape future regulatory frameworks.
Qamar Anwar, the managing director at First4Lawyers, said that CMC welcomed tighter regulation.
“The Financial Conduct Authority has a proven track record for dealing with financially-related firms and I suspect it may do a better job than the current regulators.
“However, we really would like to see more distinction made between the regulation of financial services CMCs and non-financial services CMCs as this will help all on the road to improved regulation of the sector. Only 4% of complaints about CMCs relate to PI, so it is a missed opportunity to better regulate bad practice by lumping the good, the bad and the ugly all into one.”