The FCA are taking over regulation of the claims management sector on 1st April 2019. All claims management companies (CMCs) that want to continue to carry on regulated activity after 1 April will need to apply for temporary permission and thereafter submit a full application to the FCA in their application window (which will be determined based on the firm’s activity) between April and July 2019. Failure to submit an application within the relevant period will mean that a firm’s temporary permission expires, and the firm will have to cease carrying on regulated activities from 31st March 2019. Obtaining a claims management authorisation from the FCA will require a firm to demonstrate that their business meets the requirements of the FCA’s threshold conditions, that the firm’s activities will be compliant with FCA regulations and rules within the sourcebooks and that the firm’s controllers (directors and shareholders) are suitable and fit and proper for their role and responsibilities that they hold for the firm. Moreover, CMCs must have appropriate systems and controls in place to ensure their compliance. Authorisation will only be obtained if the firm can demonstrate satisfaction of the requirements.
The FCAs Senior Managers and Certification Regime (SM&CR) will also apply to CMCs from December 2019. Senior Managers will need approval from the FCA, they will also be subject to the Senior Managers conduct rules and be assessed as fit and proper, providing regulatory references for the last six years of employment.
All CMCs that wish to continue to operate under FCA regulation will need to meet the minimum required standards, both at the time of obtaining temporary permissions, authorisation and afterwards.
As part of this transition, responsibility for considering complaints against CMCs will transfer from the Legal Ombudsman Service (LeO) to the Financial Ombudsman Service (FOS).
The FCA is proposing tiered levels of application fees based on firm turnover:
• Turnover up to £1 million: £1,200
• Turnover above £1 million: £10,000
Authorised firms with existing Part 4A permissions applying to vary their permission to include claims management permission will receive a 50% discount on the application fee.
Firms will also be required to pay the applicable periodic fees within 14 days of submitting their application for temporary permission. These will be based on turnover, with a minimum fee of £1,000 for CMCs with a turnover of up to £100,000, plus the variable rate of £13 per £1,000 of turnover over the £100,000 threshold.
How we can help
Over the last ten years our team has helped hundreds of firms across various sectors obtain FCA authorisation, as well as supporting many MOJ regulated firms with their compliance.
We provide sensible, commercially focused compliance advice to prepare your firm for the upcoming changes and support you through the application process. If you would like to discuss exactly how we can assist in preparing your firm now for a smooth transition to the FCA, please get in touch.
Drop in sessions
We are hosting multiple Q&A sessions in the run up to the transition to the FCA. This will give you the opportunity to meet our regulatory team, ask questions and talk about the challenges that firms may face, as well as gaining an insight in to how you can start preparing your firm now to ensure a smooth transition.
To enquire about our free Q&A session please register your interest at email@example.com
CP18/15 Claims management: how we propose to regulate claims management companies (link: https://www.fca.org.uk/publication/consultation/cp18-15.pdf).[/fusion_text][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]