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Endowment chasers set to be regulated

Endowment mortgage claims management companies are to be regulated in the upcoming Compensation Bill although it is unclear which body will take responsibility.

The Department for Constitutional Affairs says it has made provision to legislate later this year in a Bill intended to tackle the compensation culture but it will not speculate as to whether the FSA, Law Society or a new body will act as regulator.

The FSA stated in a report last week that it is unsure who will be responsible for regulation. However, it criticised CMCs, pointing out that compensation is intended to put consumers back in the position they would have been in had a repayment mortgage been purchased instead.

CMC Endowment Justice director Marianne Fitzjohn says it has been calling for regulation for some time but believes the Law Society, rather than the FSA, would be best placed to do this job.

CMCs are currently regulated through a voluntary code run by the Claims Standards Council but Fitzjohn says self-regulation has not worked.

A DCA spokesperson says: “As part of the Bill, we will be looking to regulate CMCs, including criminal and personal injuries and endowment mortgage claims. It is likely to be a flexible document and it is too early to say who will be responsible for regulation.”

Hanson Financial Management director Nicholas Hanson says: “These guys do nothing but harm to our industry, misguiding consumers and trying to push through illegitimate claims. The sooner they are regulated, the better.”

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