The regulation of claims management companies could be transferred to the FCA under a Government review of the industry.
The Government launched a call for action today for a fundamental review of the way claims firms are regulated.
Claims firms are currently regulated by a unit within the Ministry of Justice.
The Government says the review may consider transferring the regulation of claims firms to the FCA, dual regulation between the FCA and MoJ, or the creation of a new independent regulator. It may also consider strengthening the existing regime and giving further powers to the MoJ.
The review will be led by Carol Brady, a non-executive director of the claims management regulation board and chair of the Trading Standards Institute. She will be supported by a secretariat drawn from staff at HM Treasury and the MoJ.
The review will make final recommendations to HM Treasury and the MoJ in early 2016.
The Government says the review should consider how to improve consumer protection and mitigate the “wasteful impact” of poor conduct and service on businesses which are subject to complaints from claims firms.
The review will consider the resources and powers required for a strengthened regulatory regime.
Justice Minister Lord Faulks says: “The Government is taking action to make sure people aren’t having their time wasted or being taken advantage of by the greedy practices of some firms.
“We want to be certain that we are doing all we can to get consumers a fairer deal and rid the industry of rogue behaviour.”
Separately, a consultation on proposals to cap the fees that claims firms can charge customers is due to be published later this year.