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Govt eyes FCA regulation for claims firms

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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.

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Comments

There are 9 comments at the moment, we would love to hear your opinion too.

  1. A new regulator, great more Quangocrats.

    Joint regulation, a game of pass the parcel.

    Either leave things alone or let the FCA deal with the issue.

  2. Going to the FCA would be wise, yes. Bring them into line!

  3. Is this an admission that the MoJ hasn’t done a very good job (which it clearly hasn’t) and should never have been given responsibility for regulating CMC’s in the first place?

    It’s interesting also that no mention is made of CMC’s helping people make fraudulent claims based on a tissue of lies or the FOS commonly accepting a complainant’s undocumented version of events over the defendant’s fully documented version of them. What about “a fairer deal” for regulated intermediaries?

  4. It is no secret that the MOJ didn’t want the task in the first place.

    The CMC Regulation unit is understaffed and underfunded and fails in many instances to weed out the corrupt individuals and the claims-mongering ethos that permeates the majority of these firms.

    Regulation by the FCA would involve a short, sharp shock and may have the beneficial side-effect of removing most from the industry.

  5. Not before time the government looked at industry
    I am currently helping some one involved in the Arc Cru investment Just read some papers today The client paid a claim firm £6000 for filling in documents for FSCS

  6. I think it might help.

    Four years ago had to deal with a complaint in which the director of an ambulance chaser said of his client, “she is a very cautious person; everything she has ever done has been zero risk”.

    Yet I discovered that six weeks before he had transferred the very pension put he was complaining about to a fund that included Black Rock Global Equity Index and Pacific Basin funds.

    I reported it to both the FSA (as it was at the time) and the MOJ but both businesses are still running.

  7. Good, we can complain to their ombudsman then!

  8. Douglas Baillie 3rd October 2015 at 1:06 pm

    Is is not just CMCs, there are some legal firms that are just as bad, or worse, who will claim immunity from compliance via the Law Society!

  9. Though in my opinion the FCA didn’t go far enough with its regulation of payday loan companies, at least it got stuck in pretty decisively and without delay once it was given the mandate. Most of the CMC’s are just scumbag rip-off merchants, well overdue for a good stiff dose of the FCA’s hatchets and sledge hammers style of regulation.

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