The FCA has published its Consultation with regard to how it intends to regulate the activities of claims management companies. Legislation is in the process of bringing these companies with the ambit of the FCA. This is perhaps an industry which has been crying out for more effective regulation for some time.
The FCA has highlighted a number of areas of concern within the industry. These include fraudulent claims, aggressive and misleading marketing practices (the FCA has referred to 2.7 billion unsolicited calls, texts or emails in a 12 month period), poor service and poor controls for those leaving the industry. The impact of FCA regulation could be significant.
The FCA highlights the application of the senior managers' regime when it comes onto force, the Principles for Business and the application of the Systems and Controls which apply to other regulated businesses.
There will also be extensive Conduct Standards which will apply a "acting in customers' best interest rule", impose restrictions on the use of lead generators, impose the need to record calls and apply FCA financial promotion rules. Lead generation rules will mean that CMCs will need to ensure that leads are obtained in line with data protection legislation and privacy and electronic communication legislation with particular requirements for leads generated overseas.
The FCA will also take steps to beef up prudential standards in the industry.
Perhaps this is an area where increased intervention by the FCA is long overdue.
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