Financial Conduct Authority (FCA) regulation of claims management companies (CMCs) has finally arrived and given that the new rules were announced some months ago, these firms may find that their new regulator does not allow them any form of grace period and is instead expecting them to be fully compliant from day one.
However, companies should note that a great deal of information and guidance is also available from the FCA.
Firstly, the regulator has a dedicated claims management page on its website, where there are links to information such as:
- The Policy Statement that explains in plain English the rules CMCs now need to follow
- How the FCA will supervise claims companies
- How the Senior Managers & Certification Regime will apply to CMCs
- How these companies can go about obtaining full authorisation
The definitive rulebook for CMCs is the section of the FCA Handbook entitled Claims Management: Conduct of Business sourcebook, or CMCOB. The rules are divided into a number of sections, including:
- Application and purpose
- Conduct of business
- Financial promotions and communications with customers
- Pre-contractual requirements
- The fee cap
- Post-contractual requirements
- Prudential requirements and professional indemnity insurance
- Arrangements for firms with temporary provision
- Record keeping requirements
- Notification and reporting requirements
Firms (this is the term the FCA generally uses for all companies it supervises) are advised to keep a close eye on the FCA website for any guidance, consultation papers, policy statements and the like which concern claims regulation. CMCs should also keep watch for any announcements of seminars and other training sessions being delivered by the FCA or the Financial Ombudsman Service (FOS). These often allow firms the chance to hear FCA and FOS speakers explaining what constitutes good and poor practice. These sessions also allow firms the chance to ask questions and discuss regulatory issues with other firms.
CMCs should also look out for details of any enforcement action the FCA takes against claims firms. It might seem strange to include this under the heading of ‘guidance and support’, however FCA decision notices and final notices are much more detailed than those published by the Ministry of Justice. The previous regulator did little more than list the sections of its rulebook that the company in question had breached, whereas FCA enforcement notices provide lots of detail regarding exactly what the firm has done wrong. Other firms can then use these details to decide if any of the criticisms could conceivably apply to them, and to consider whether they need to make any changes to their own practices and procedures.
The FCA also operates a telephone and email helpline, known as the Firm Contact Centre, for any firm which is not big enough to have been allocated a dedicated FCA supervisor.
Finally, of course your compliance consultant is available to provide whatever help and guidance you need as you seek to embrace the brave new world!
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