CMCs: how we will authorise and regulate firms

Claims management companies (CMCs) are subject to our regulation. Read about the standards and rules your firm needs to meet.

Our 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 were published on 29 March 2019.

On 29 November 2021 we published updates to the conduct of business rules and new rules restricting the fees that CMCs can charge on claims about financial products and services. All firms must ensure they understand how the rules affect their business - read our policy statement and final rules

Threshold conditions

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

The Senior Managers and Certification Regime (SM&CR) applies to CMCs. The management body of a CMC (ie, directors and non-executive directors) is assessed for its skills, experience and suitability during the firm application process. SM&CR introduced new standards of professionalism, conduct and governance to the firms we regulate, and enables us to hold individuals accountable for their actions.

Supervision and enforcement

Once we have authorised a firm, we supervise it to make sure the firm is meeting the standards we require and complying with our rules. We look 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. These range from giving firms the opportunity or requiring them to address the issue as part of our supervision work, placing requirements on firms 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.

Thematic work

We 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.

Compliance guidance

We 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.

Page updates

: Editorial amendment page update as part of website refresh
: Information changed Content updated after publication of PS21/18