Consultation Response – FCA: how we propose to regulate claims management companies

Consultation Response – FCA: how we propose to regulate claims management companies

On 2 August 2018, the Legal Ombudsman (LeO) responded to a consultation issued by the Financial Conduct Authority (FCA) on how it proposes to regulate claims management companies (CMCs). In this the FCA makes proposals to strengthen the current regulatory regime when responsibility for CMCs transfers from the Claims Management Regulator (CMR) on 1 April 2019.

LeO has chosen to respond in order to share the operational insight we have gained from handling consumer complaints about CMCs over a three-year period. We are keen to see a robust framework of regulation which protects the rights of consumers while still allowing CMCs to operate effectively, and hope that this can reflect learning from the challenges we have faced.

In our response, we share our views on third party lead generators, recording calls, pre-contract disclosure requirements, ongoing disclosure and collection of fees, notification and prudential resources requirements, and client money handling.

We are pleased to note that this consultation addresses many of the challenges that consumers currently encounter when interacting with CMCs. A copy of our full response can be viewed here.