Chancellor George Osborne has set out plans to conduct a major review of claims management companies and cap fees.
Giving his Budget speech today, Osborne said the Government will scrutinise the regulation of claims management companies.
Details of the review and the level of the proposed cap have not yet been published.
The plans were announced alongside an increase in insurance premium tax.
Osborne said: “We’ve taken action to make sure that consumers get a better deal from another important industry – insurance.
“The cost of premiums are down for families.
“And today we’re announcing a major review of the regulation of claims management companies and we’ll cap the charges they can apply to their customers.
“Britain’s insurance premium tax is well below tax rates in many other countries.
“I am therefore today raising insurance premium tax – which applies to only one fifth of all premiums – to 9.5 per cent, effective from this November.”
Greater scrutiny of CMCs is likely to be welcomed by advisers, who regularly complain of the strain spurious claims place on their businesses.