FCA to regulate claims management companies

[Conniff]

Budget 2016: FCA to regulate claims management companies

 

 

 

The government has moved to make the Financial Conduct Authority (FCA) responsible for regulating claims management companies.

 

Announced as part of today's Budget measures, the Treasury said it would introduce a ‘tougher’ regulatory regime for claims management firms.

 

This followed a review of the claims management industry which recommended a cap on the amount such firms can charge.

 

‘The government is clamping down on the rogue claims management companies that provide bad service and bombard customers with nuisance calls,’ it said.

 

‘The new regime will be tougher and will ensure claims management company managers can be held personally accountable for the actions of their businesses.’

 

The Treasury said the FCA would be put in charge of the new regulation.

 

‘In order to ensure that the new regulatory regime is implemented effectively, the government intends to transfer responsibility for regulating claims management companies.’

 

The move to regulate claims management firms follows a National Audit Office report into financial mis-selling redress, which discovered claims management firms made between £3.5 billion and £5 billion from the total £22 billion paid out to victims of payment protection insurance mis-selling.

 

City Wire

 

 

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The prominence of CMCs has risen in recent years with scandals such as payment protection insurance, where banks have provisioned a total of £30bn for compensation, making it the UK’s costliest instance of mis-selling.

 

CMCs are estimated to have received as much as £5bn of the overall £22.2bn paid out by banks in PPI compensation between 2011 and 2015, according to a recent report by the National Audit Office.

 

Financial Times