Claims management companies (CMCs) must raise the standard of their advertising, the Financial Conduct Authority (FCA) has warned.
The FCA has reviewed more than 200 CMC adverts and promotions across various media since taking over as their regulator in April and found widespread poor practice.
Failures include identifying themselves as CMCs and stating to customers that they can make a claim to a statutory ombudsman or compensation scheme without paying a fee.
CMCs have also given the impression that the use of a third-party service would secure a better outcome, and promised ‘no win no fee’ but failed to set out the fees that the customer must actually pay.
The FCA has been taking action on the back of these findings. The regulator wrote to CMC executives in June to remind them of its financial promotion rules, and used its formal financial promotions banning power where a CMC appeared to be using a celebrity endorsement without the individual’s permission.
The regulator has also highlighted its concerns to CMCs and visited them in cases of particularly poor financial promotions.
Jonathan Davidson, executive director of supervision for retail and authorisations at the FCA, commented: “Many CMCs play a significant role in helping consumers to secure compensation. But CMCs using misleading, unclear and unfair advertising practices to get business is completely unacceptable. We won’t hesitate to take action where we consider that customers are being misled or otherwise treated unfairly by poor advertising.”
“Firms should also understand that we will take their compliance with our rules on financial promotions into account when considering applications for full authorisation.”