Claims management companies (CMCs) have been warned to expect something of a ‘double whammy’ this year, as payment protection insurance (PPI) claims surge ahead of the deadline, whilst at the same time the companies will need to devote time and resources to preparing for Financial Conduct Authority (FCA) regulation.
The FCA’s PPI claims deadline of August 29 2019 is now only six months away. Consumers who have not already done so, need to refer their PPI complaint to their provider or to the Financial Ombudsman Service by 11.59pm on this date, or they will lose their right to have their complaint assessed. The only circumstances in which the PPI provider will be obliged to consider complaints made after the deadline are:
- Complaints about PPI sold after August 29
- Complaints about service and administration of PPI policies
This inevitably means that CMCs that handle PPI complaints should expect a surge of claims in the next few months. At the same time, companies need to be preparing for the significant changes that FCA regulation will bring. There is no indication that the FCA will allow CMCs any sort of ‘grace’ period, and they will expect all companies to be fully compliant with their stricter requirements by April 1.
CMCs that intend to continue trading after April 1 should first complete their registration for ‘temporary permission’ via the FCA’s Connect system. Officially, this needs to be done by March 31, although the FCA advises that CMCs do this as soon as possible. When completing their temporary permission application, CMCs will need to confirm which activities they will be carrying out, e.g. lead generation only, or advising, investigating and representing. They will also confirm at this stage which sectors they will operate in, e.g. PPI and other financial services and products, housing disrepair etc.
The new rules for CMCs have already been published, and the FCA expects CMCs to be making the necessary changes to their practices and procedures to ensure that they will be fully compliant on April 1, when the FCA becomes the UK’s claims management regulator. Companies that have not adapted to the new regime by this date could face enforcement action from the FCA.
At temporary permission stage, the FCA will not be assessing CMCs for their suitability to carry out regulated activities. Instead, the regulator will do this when companies submit their application for full authorisation, and for CMCs that handle PPI and/or other financial claims, this application must be submitted between April 1 and May 31 2019. With the deadline for submitting this application no more than three months away, CMCs should now also be preparing this application. Only in ‘exceptional circumstances’ will the FCA consider an application made after May 31.
Any CMC handling financial claims that fails to register for temporary permission by March 31 or fails to submit a full authorisation application by May 31 will need to cease claims management activity.
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