The FCA has announced its proposals for regulating claims management firms, including plans to force them to show their fees up front and signpost free organisations like the Financial Ombudsman Service.
The FCA will take over the regulation of claims companies from next April.
Ahead of the move, it plans to require claims firms to detail their fees and services to the consumer before they sign any contract.
Marketing material and other pre-contract disclosure will also need to make it clear that free alternatives may exist for consumers, including ombudsmen schemes like the FOS and The Pensions Ombudsman.
Leads lists are also on the regulator’s radar. Claims firms will not be able to simply take leads lists from third parties without checking and recording that they have been obtained legally under the FCA’s proposals.
FCA chief executive Andrew Bailey says: “A well-functioning claims management sector can help to provide justice and redress to people who have suffered harm. But the market doesn’t always work as it should and poor conduct persists across the sector.”
Advice trade body Apfa, now part of Pimfa, previously campaigned for tougher regulation of the claims sector, after estimating that nearly one-in-five complaints against advisers were bought by a claims management company.