FCA sets March deadline for CMC permissions
The Financial Conduct Authority has invited claims management to register for temporary permission to continue operating once the sector enters the financial regulator’s remit later this year.
From 1 April 2019, the responsibility for regulating CMCs incorporated in and serving customers in England, Scotland and Wales will be transferred to the FCA from the Claims Management Regulator – a unit of the Ministry of Justice.
In addition to the change of regulator, CMCs incorporated in, and serving only Scottish customers, will need to seek authorisation for the first time, as Scotland was previously outside the remit of the Claims Management Regulator.
In order to continue trading from April, CMCs will have to register for temporary permission before 31 March 2019, and submit an application for full FCA authorisation during one of two periods between April and the end of July.
Firms that fail to register for temporary permission will be unable to perform any regulated claims management activity.
When firms register for temporary permission they will need to confirm which sectors they will be active in and which activities they will be carrying out.
Currently, the Claims Management Regulator issues a single permission to CMCs for activities across six sectors: financial services and products, personal injury, housing disrepair, specified benefit, criminal injury, and employment.
Under the FCA regime, there will be seven different permissions; one for each of the aforementioned sectors and one for lead-generation activities.
The FCA will also require CMCs to provide potential customers with an outline of the fees they charge and the services they provide before any contract is signed, as well as highlighting any free alternatives to their services in marketing material.
CMCs will also have to carry out due diligence to ensure that those leads are obtained legally, and will be prohibited from bringing claims that are fraudulent, has no good, arguable base, or is frivolous or vexatious.
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