Concerns over advice firms with claims management permissions
What has happened?
In an article published in November 2021, the Personal Finance Society (PFS) stated that the FCA should ensure that the 54 firms that hold permissions to advise on investments and also to act as claims management companies (CMCs) do not have a conflict of interest.
What do you need to do?
According to data obtained by trade magazine FTAdviser under the Freedom of Information Act, 54 authorised firms have permissions to advise on investments and also hold some form of claims management permissions. The FOI request was made in the light of the FCA’s plans, announced in May 2021, to stop the practice of ‘claims management phoenixing’, by banning claims management companies from managing Financial Services Compensation Scheme claims where they have a relevant connection to the claim.
The FCA believes that phoenixing, where an individual related to a failed advice firm resurfaces at the CMC handling claims against their former business, accounts for at least 220 FSCS claims each year.
Matt Connell, the director of policy and public affairs of the PFS, has been quoted as saying: “Individuals should not be able to financially benefit from their own past conduct, which caused consumers to be out of pocket. We urge the regulator to take further steps to make sure firms with dual permissions to recommend investments and act as claims management companies are adequately addressing any potential conflicts of interest. Any poor practices among claims management companies must be addressed as ultimately this impacts on public trust in the personal finance profession."
How can we help you?
If you’d like to know more about how we can help you with your claims management or conflict of interest arrangements, or with any other regulatory compliance issues, our expert team is here to help.
Contact us today on 0207 436 0630 – or email info@thistleinitiatives.co.uk.