Claims management companies (CMCs) should now address the issue of registering for the temporary permission they will need should they wish to continue trading when the Financial Conduct Authority (FCA) takes over regulation of their sector from April 1 2019.
This applies both to CMCs based in England and Wales, who are currently regulated by the Claims Management Regulator at the Ministry of Justice; and to Scottish CMCs, who have so far not been subject to formal regulation.
Officially, the period for applying for temporary permission ends on March 31 2019, however the FCA is warning claims companies that they “should not leave it to the last minute to register to avoid potential problems or delays.”
These temporary permission registrations should be made via the FCA’s online application system, Connect. When registering, CMCs will need to confirm which activities they will be carrying on (e.g. lead generation; or advising, investigating and representing) and in which sectors (e.g. financial services and products, housing disrepair).
From April 1, even though they will only hold ‘temporary permission’ rather than ‘full authorisation’ from the FCA, all CMCs will be expected to comply with the new FCA rulebook and could be subject to enforcement action if they fail to do so. This means claims companies have a little under three months to ensure they will be compliant with the new stricter regime come the switchover date.
Additional disclosure requirements and an obligation to record client phone calls are just some of the changes that will apply to claims companies under the stricter FCA regime.
Simply obtaining temporary permission from the FCA does not in any way mean that the regulator has deemed that the company is suitable to operate under the new regime. Once they have obtained temporary permission, CMCs will need to apply for full FCA authorisation in one of two further application periods:
- Between April 1 and May 31 if they are a CMC that handles financial claims, or are a CMC that was not previously regulated by the Ministry of Justice
- Between June 1 and July 31 for all other companies
Any claims company that fails to apply by the end of the appropriate period will lose their temporary permission, and with it the right to continue to operate.
The FCA adds that its main aim will be “to ensure CMCs are trusted providers of high quality, good value services that help customers pursue legitimate claims for redress and benefits the public interest.”
The FCA has now launched a new information page for CMCs. At present, this page contains links to:
- Policy Statement 18/23 – which explains how the FCA will regulate CMCs, and the rules companies will have to comply with come April 1
- Consultation Paper 18/26 – which explains the FCA’s proposals regarding how the Senior Managers & Certification Regime might apply to CMCs
- Information about the process of registering for temporary permission
- The information that will need to be submitted when the time comes for a CMC to apply for full authorisation
Claims companies are advised to keep a close eye on the FCA website for any new information that may be published as the switchover approaches.
The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article