CP21/1: Restricting CMC charges for financial services and products claims
We are consulting on rules to secure an appropriate degree of protection against excessive charges by claims management companies (CMCs).
Why we are consulting
We want to see consumers who use CMCs charged at a level that reflects the value of the service being provided.
In summary, we propose to:
- address consumer harm by restricting the fees that can be charged to a consumer for claims management activity for a claim about a non-PPI financial product or service
- enhance requirements for all CMCs to disclose information to help consumers make an informed choice about using claims management services in cases where there is an option to claim under a statutory scheme
- make minor changes to clarify and improve aspects of our existing rules for CMCs
Who this applies to
This paper will be of interest to:
- FCA-authorised firms carrying on claims management activity for financial products and services
- firms considering applying for FCA authorisation to carry on claims management activity for financial products and services
- trade bodies representing CMCs
- consumer organisations
- groups that represent those with protected characteristics
This paper will also interest:
- consumers, in particular anyone who has used, is considering using or decided not to use claims management services
- FCA-authorised firms carrying on claims management activity for non-financial claim types
Background to CMC fees
Under the Financial Guidance and Claims Act 2018 (FGCA), Parliament transferred regulation of CMCs to the FCA. We have a duty to make rules about CMC fees for claims relating to financial products and services. This duty requires us to make rules with a view to securing an appropriate degree of protection against excessive CMC charges.
Parliament also gave us powers, but not a duty, to make such rules for other FCA-regulated CMC sectors, namely personal injury, housing disrepair, industrial injuries benefit, criminal injury and employment.
We have prioritised making rules for the financial products and services CMC sector and will consider using these powers in the other sectors in due course.
These proposals will not apply to claims that relate to payment protection insurance (PPI). PPI claims are already subject to a cap under the FGCA and we are not proposing to change that.
Next steps
We are asking for your comments by 21 April 2021.
Email your responses to [email protected] or write to: The CMC Policy Team, FCA, 12 Endeavour Square, London, E20 1JN.
We are hosting some virtual roundtables in the coming weeks. If you would like to participate please send an email to [email protected] with your details.