The Financial Conduct Authority (FCA) will become the new regulator of Claims Management Companies as of the 1st of April 2019. Please be aware that companies that are not authorised after this date will NOT legally be allowed to make a claim for anyone. There are a lot of ‘rogue‘ Claims Management Companies out there, as the rules and regulations tighten, hopefully these will start to disappear. Please be vigilant as to who you decide to use. If you are unsure, you are able to find out using the link at the bottom of this article.
The idea behind the FCA taking on this responsibility is to increase consumer protection. So, all in all, a good thing for you! That is, if the company you have chosen to make a claim on your behalf is regulated.
Claims firms should already be taking the steps towards this transfer of authority. There are three main areas that the FCA hope to improve in taking over this regulation:
– Providing customers with more value-for-money service that suits their claim.
– Common set of standards to be followed so that the CMC’s are more in line with one another.
– Regulation of high standards to improve public perception of CMC’s.
The first step that CMCs must take is request temporary permission. Your claims company should already have made or be planning to make this application to be in line with the change by the time it comes into place. The closing date for temporary application is 31st March 2019. All companies will have to confirm which activities they propose to continue, such as; lead generation, advising, investigating and representing in which sectors, e.g. financial services, mis-sold timeshare, house repairments, etc.) Application can be made online through the FCA official website.
Once an application has been made, firms will need to comply to the new FCA standards as of 1st April. Sanctions will be made against those that are found to not be complying. An important and interesting point is that the FCA are able to stop or pause a company from executing particular claims or activities and this can be based on their conduct after April 1st or indeed their conduct previous to the change in regulation if found to be relevant.
Firms that are obliged to register with the FCA are:
– Companies authorised to carry out Claims Management under compensation Act 2006.
– Firms that would have been required to be authorised under the Act if it was in Scotland.
– Firms performing CMC activities under section 75 of Consumer Credit Act.
The new set of rules and regulations that have been set out for this change over have been confirmed. There are a lot of the rules that are the same or very similar to those that the Claims Management Regulator have had to date. However, there are also new rules and changes to some of the old rules. All firms have been told that they should ensure they are aware of these changes and have them in place by April 1st. The full set of rules are outlined in the Policy Statement and Final Rules on the FCA official website.
There are a set of threshold rules that are the minimum standards a firm must comply with if they want to be authorised and these have to continue to be followed once a firm is authorised. There will be personal accountability and suitability that will be assessed. So, directors and non-executive directors alike will be tested for their suitability and skills. There are certain standards of conduct and governance of these individuals within the CMCs and they may have to comply with the FCA’s Senior Management and Certification Regime (SM&CR), this has not been confirmed yet, but will be published in the spring of 2019.
Once a firm is authorised, checks will take place on a regular basis. Firms should always comply with the new regulations. Checks may be carried out by company visits and or analysing processed claims. If firms are found to not be carrying out their claims compliantly, the FCA have the authority to place restrictions on that companies’ activities, some or all activities may be stopped completely or paused until corrected, depending on the severity. If serious misconduct is found, monetary fines can be sanctioned.
The FCA will also carry out thematic work, which shows trends and patterns. To make this possible the FCAs will more than likely request information to carry out this work to provide reporting and make changes for the better towards claims handling. There will also be compliance guidance, which has been set up for firms that are not adhering to the standards but are trying to pull their company into line with the new regulations.
We would recommend that you do a full check on the company that you are thinking about or already have a claim with at the moment, to find out if they are compliant with the new legislation set out by the FCA. If they do not apply for this authorisation before 31st March, they will no longer be able to make claims legally on behalf of others. You are able to check if a company is registered with the Claims Management Regulator by using this search. The CMRs regulated Claims Management Companies prior to the FCAs and get temporary authorisation.
For more information regarding this article or assistance in any other timeshare related issues please contact the TCA on 01908 881058 or email: info@TimeshareConsumerAssociation.org.uk