13Feb

The Claims Management Regulator at the Ministry of Justice (MoJ) has published what will be its final quarterly news bulletin for claims management companies (CMCs).

As one might expect, most of the February 2019 bulletin concerns the impending switch of claims regulation to the Financial Conduct Authority (FCA).

The first important issue addressed in the bulletin is that existing CMCs will not automatically transfer to FCA regulation on April 1. Instead, any claims company that wishes to continue trading after this date will need to access the Connect portal via the FCA website, and provide the details requested to apply for temporary permission. CMCs are advised to do this as soon as possible.

Next, CMCs are reminded that obtaining FCA authorisation is a two-stage process. Once a company has registered for temporary permission, they will need to submit a second, more detailed, application in order to obtain full authorisation. All CMCs should receive details of the application window during which this application should be submitted, but essentially the application windows are:

  • 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

The bulletin then highlights that all CMCs will be subject to the FCA’s rules from April 1 and says companies should already be getting familiar with the details of the FCA rulebook, and preparing for the stricter requirements they will face from this date.

CMCs that do not intend to operate under the FCA regime, and who instead plan to exit the market, are referred to the previously published MoJ guidance on ‘ending and transferring client relationships.’

Another change from April 1 is that the organisation that will consider complaints about CMCs will change from the Legal Ombudsman (LeO) to the Financial Ombudsman Service (FOS). When sending complaint final response letters on or before March 31, the letter still needs to refer to the client’s right to refer the matter to the LeO, although it may also be desirable to state that the client should refer their complaint to the LeO prior to April 1, and to the FOS if their complaint is made after April 1.

In final response letters sent on or after April 1, clients need to be signposted to the FOS, and the LeO should not be mentioned in the letter.

The last section of the letter concerns some data protection concerns which the MoJ has observed. It urges CMCs to carefully consider what information they require in support of their client’s complaint, and whether there is an alternative method of obtaining this information.

CMCs are also asked to ensure that Letters of Authority they ask clients to sign are ‘clear, fair and not misleading’. The regulator is concerned that many clients have not understood the range of information that the CMC will access, or the type of complaints that the CMC will pursue on their behalf. The bulletin gives the example of a client who thought that their CMC was pursuing a payment protection insurance complaint on their behalf, but a packaged bank account complaint was submitted instead.

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