What has happened?
In November 2021, the FCA set out in its Policy Statement 21/18 new rules for claims management companies (CMCs), intended to protect consumers against excessive charges. The legal instrument accompanying the Policy Statement contains final rules and guidance, which will come into force on 1 March 2022.
What do you need to do?
The rules relating to fees and disclosure affect CMCs managing claims about non-PPI financial products and services, and consumers who might wish to use the services of those CMCs. The minor amendments to CMCOB, and some of the disclosure rules, affect all FCA-regulated CMCs.
The FCA is restricting the fees claims management companies charge for managing claims about non-PPI financial products and services through a fee cap. The fee cap, which is reproduced below, is intended to allow CMCs to continue delivering value to individual customers and wider society while generally preventing fees that are higher than necessary to deliver that value.
[Source: FCA Policy Statement 21/18]
The FCA is also enhancing the requirements for CMCs to give consumers important information in the pre-contract stage and is making some minor updates and clarifications to other rules applying to them.
The FCA has undertaken to monitor the cap’s effects on the CMC market and its consumers through regulatory returns and its ongoing supervisory work. It will annually monitor whether average fees by product type calculated from regulatory return data and the existing estimates of value from CP21/1 suggest significant excessive charging. If it finds evidence of this, it has undertaken to review the fee cap and disclosure rules after they have been in force for two years. The cap will be reviewed in later years if there is evidence that it is not achieving its objective.
How can we help you?
If you’d like to know more about how we can help you with your claims management fee charging 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.