The Financial Conduct Authority (FCA) has published a new set of rules and fees that will apply to all claims management companies (CMCs) when it takes over their regulation in April 2019.
Aiming “to ensure that CMCs are trusted providers of high quality, good value services that help customers pursue legitimate claims for redress, and benefit the public interest”, the FCA’s new rules will empower customers to choose value-for-money services, strengthen redress and ensure they work to a common set of standards, and prioritise high standards of conduct.
Following the consultation, the FCA has clarified the requirements for lead generators when using the term ‘no win, no fee’, and reduced the amount of information that CMCs need to set out on the services they will provide in a one-page summary document.
The FCA also tweaked its fee structure, introducing a lower minimum periodic fee of £500 for smaller firms with turnover up to £50,000 instead of the proposed single minimum fee of £1,000 for firms with turnover up to £100,000.
In addition, all firms have to record and retain customer telephone calls for a year after their final contact with a customer.
Jonathan Davidson, executive director of supervision of retail and authorisations at the FCA, said: “We’re ready to take over regulation on 1 April 2019. The new regime aims to drive up standards in a sector whose reputation has been tarnished by some companies engaging in high pressure selling and by failing to provide clear information on the fees they charge.”
“The new rules will ensure firms are transparent about their estimated fees before the customer signs on the dotted line, and notify customers of free statutory ombudsmen or compensation schemes. It’s vital that customers have the information they need to make informed decisions. We will take action against those that break the rules.”
CMCs will be able to apply for temporary permission to operate from January 2019. This will allow them to continue operating until they are fully FCA-authorised during one of two waves running from April until the end of July.