CMCs are transferring to FCA regulation – read about the standards and rules your firm will need to meet.
FCA conduct rules
We published the final conduct of business and fees rules for CMCs in December 2018 and Senior Management and Certification Regime (SM&CR) rules will be published in Spring 2019. Many of the rules are very similar to, or the same as, the Claims Management Regulator’s rules, but some are new or different – so all firms must ensure they understand how the rules will affect their business. We recommend that you read our policy statement and final rules.
Threshold conditions are minimum conditions that all firms must meet if they want to be authorised. They are set out in paragraph 2B of schedule 6 of the Financial Services and Markets Act. You can also find them in our Handbook. Once authorised, firms must continue to meet these standards on an ongoing basis.
Personal accountability and suitability of individuals
CMCs' management body (ie, directors and non-executive directors) will be assessed for their skills, experience and probity/suitability during the firm application process. We have also consulted on applying the FCA’s Senior Management and Certification Regime (SM&CR) to CMCs. SM&CR has introduced new standards of professionalism, conduct and governance, to the firms we regulate, as well as enabling us to hold individuals accountable for their actions. We will publish our decision on whether to apply SM&CR to CMCs in the spring.
Supervision and enforcement
Once the FCA authorises a firm, we will keep checking to make sure the firm is meeting the standards we require and complying with our rules. We will be looking at individual firms, which may include firm visits or desk-based analysis. The outcome of this work depends on the situation. When firms are not meeting required regulatory standards, we have a range of tools and powers we can use. This ranges from giving firms the opportunity or requiring them to address the issue as part of our supervision work, placing requirements or varying permissions to restrict what they can do (including removal of permissions). We can also open an enforcement investigation and ultimately impose an enforcement sanction (such as a financial penalty) if there is serious misconduct.
We will also look at wider patterns or trends in the sector. This is known as ‘thematic’ or 'multi-firm' work, and may include requesting information from firms. We may publish a report after completing thematic work, highlighting where we feel firms are getting things wrong, or where we want to explain what we expect of firms in relation to a specific area or rule. Thematic work may also lead to enforcement action against individual firms, if necessary.
We will set out when and why we think a firm is not meeting our standards and must change the way they run their business. This means firms are responsible for assessing and ensuring that they are meeting our standards. This may be a change for claims management firms that previously may have contacted the Claims Management Regulator for compliance advice.