On Friday 23 August the FCA issued a fairly sharply-worded press release entitled ‘Claims Management Companies must raise advertising standards’, which begins with a summary of the rules which the regulator will apply when considering advertising material used by CMCs.
Towards the end of the press release there is a link to the ‘Dear CEO’ letter which the FCA issued to firms in the CMC sector in early June, that being only two months after it took over formal statutory regulation of the sector. [The shift in regulation to the FCA was made by the Financial Guidance and Claims Act 2018. Before this, regulation was by the Ministry of Justice operating under the rather more limited scope of the Compensation Act 2006.]
The Dear CEO letter noted that the FCA was seeing greater numbers of cases where CMCs had: no customer authority, used fictitious names, advanced claims in which the customer had no relationship with the financial services provider and had used promotional material which breached the FCA’s rules.
It is interesting and relevant that the press release and call for improvements in the sector appeared just six days before tomorrow’s deadline – i.e. 29 August 2019 – for making PPI claims expires. These have been a significant part of CMC sector activity and one might well wonder if the FCA’s call for higher standards of conduct in the sector was in any way made in anticipation of CMCs exploring alternative claims types as means of replacing the activity and income streams associated with the soon-to-be-ended PPI claims phenomenon?
Alistair Kinley, Director of Policy Development & Government Affairs, BLM