Advisers have welcomed a cap on the fees claims management companies charge consumers.
In this week’s Budget, the Government announced a fundamental review of the regulation of CMCs, led by Chartered Trading Standard Institute Board chair Carol Brady.
She will report to the Treasury and CMC regulator the Ministry of Justice by early 2016.
In addition, the Government says it will introduce a cap on the charges CMCs can apply to their customers, and will consult on how this will work in practice.
The Budget document says: “There is a case for reform of the fees that CMCs charge consumers, particularly in those instances where consumer complaints fall within the remit of the Financial Ombudsman Service.”
West Riding Personal Financial Solutions managing director Neil Liversidge says:“A cap on charges is needed because these people are making a fortune and are increasing the workload of the FOS. They should also have to contribute to the cost of the FOS.”
But Professional Financial Claims Association chairman Nick Baxter says: “There are lots of professional CMCs which employ qualified staff and charge similar rates to solicitors. If there is a cap it should also apply to solicitors work in the claims sector too.
“It should also take into account the fact that some types of claim involve more work and a higher skill level.”