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Advisers back Aifa’s call for FCA to regulate CMCs

Chris Hannant 480

Advisers have thrown their support behind the Association of Independent Financial Advisers’ calls for claims management firms to be regulated by the Financial Conduct Authority.

The Ministry of Justice published a consultation paper in August proposing new rules for CMCs that will require them to obtain signed contracts from consumers and force them to provide “unambiguous” information about relevant ombudsman schemes.

Last week, Aifa published its response to the paper. Policy director Chris Hannant (pictured) says: “The real problem within the claims management industry is not that the rules are wrong, it is the lack of enforcement. The current regime is under-resourced and ineffective. For example, banned companies can often reappear in another guise shortly after being banned.

“In the interests of consumer protection, we must ensure that sufficient resources and expertise are applied in this area. This means transferring regulation of CMCs to the new regulator, the FCA.”

Consilium Financial Planning managing director Kevin Morgan says: “It makes sense for CMCs to be regulated by the FCA to reduce the unscrupulous nature of many of the claims firms out there.”

Barretts Financial Solutions senior partner Kim Barrett says: “It is absolutely right that claims firms are regulated by the FCA. It is wrong for these firms to fall outside of its scope when there are so many dodgy businesses operating in this area.”

In July, Conservative peer Lord Flight, Labour Treasury spokesman in the Lords Lord Eatwell and Labour peer Baroness Hayter tabled an amendment to the Financial Services Bill proposing that claims firms are regulated by the FCA.

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. This is an interesting argument – my view is that just because the FSA (soon to be FCA) is known to be a tough regulator, doesn’t necessarily mean that the CMCs should be regulated by them.

    It may be a conflict of interest for the FSA to regulate two parties whereby one makes claims for mis-selling against the other. Furthermore; the type of service offered by a CMC is likely to be better regulated by a body with experience of regulating representation as opposed to advice.

    One thing I do agree with is that CMCs need regulation which is enforced. We may see a change with the MoJ once responsibility for complaints handling sits with the Legal Ombudsman from next year. Resource may not be so tight allowing them to take more meaningful enforcement action against the more unscrupulous CMCs.

  2. I cant see this being a viable option as PPI is only part of a CMCs business, they also handle claims for other areas (eg medical negligence) for which the FCA is not resourced, nor legal responsible to regulate….it couldn’t work

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