Guidance

CMR bulletin 25

Published 27 March 2015

This guidance was withdrawn on 1 April 2019

This page has been withdrawn because it’s out of date. Responsibility for the regulation of Claims Management Companies has been taken over by the Financial Conduct Authority.

This edition provides information and advice on the payment of annual fees, the new Legal Ombudsman complaints handling scheme, and obtaining sufficient information from clients before pursuing a claim. It also includes advice on dealing with financial services providers when they contact clients, and forthcoming updates to our guidance for CMCs.

1. Annual fee collection – 2015-16

You should have received a communication from us during February asking for information to allow us to calculate your annual regulation fee and complaint handling fee for the Legal Ombudsman Scheme. This information was due by the end of February.

This year’s fees are in two parts which are invoiced separately. The invoice for the Legal Ombudsman Scheme is payable by 31 March 2015 and the invoice for the annual regulation fee is due within one month of the date of the invoice. Failure to pay the fees will result in the suspension or cancellation of your authorisation.

You should inform us immediately on 0333 200 1321 if you have not received any contact from us about your annual fee or you have provided information but not yet received any invoices.

2. Legal Ombudsman complaints handling scheme

From 28 January 2015 the Legal Ombudsman began to handle complaints about CMCs. To support CMCs they have produced some resources available on the Legal Ombudsman website. This includes an industry information pack to explain how the Legal Ombudsman works and sets out what to expect if they receive a complaint about your company. The Ombudsman has also produced this signposting pack to help you tell your customers about the Legal Ombudsman.

A large part of the Legal Ombudsman’s remit is to help you learn from complaints and improve your customer service and business. They have a series of webinars available for you to view on their website, and have organised two professional learning events for CMCs. These will be held in Bristol on the 18 June and in Manchester on the 23 June – book online now.

If you have any questions or you would like to suggest a topic for the Legal Ombudsman to cover in their course then please contact Holly Richardson on cmcenquiries@legalombudsman.org.uk

3. Investigating and establishing the merits of a financial claim

Making appropriate enquiries of clients about the existence of any product e.g. PPI, which may have been mis-sold and the subject of a potential claim should be carried out in line with the Rules about “responsible conduct”. Contacting the financial services provider without having checked with your client, or still contacting them where your client has told you that they have not been mis-sold, would be deemed a breach of General Rule 2.

We have seen evidence that a large proportion of enquiries made to financial service providers (via pre-submission of any claim) result in a finding of “no PPI” – in some cases, fewer than 1 in 10 enquiries actually have a corresponding product. We are concerned that this is the result of CMCs failing to gather appropriate or sufficient information during initial contact with clients.

You must ensure that you have appropriate due diligence and fact find procedures and processes in place when making such initial enquiries. If you fail to demonstrate that you are seeking to gather sufficient information from your clients in the first instance, then we will consider taking enforcement action. Read further detailed guidance on complying with the Conduct Rules.

4. Financial services providers contacting clients

We understand that financial services providers often contact customers upon receipt of a claim relating to their potential mis-sale of a product. Any response from a CMC to such contact needs to be suitable and correct.

Some CMCs enter into inappropriate, often threatening correspondence with financial services providers, sometimes referring to legislation which has no relevance. The intention appears to be to deter the financial services provider from contacting the CMC’s client.

Some clients have been told by the CMC that they must not speak to the financial services provider when they are contacted by them. Both scenarios raise concerns and depending upon the circumstances, such conduct is likely to be in breach of the rules.

You can reduce the likelihood of financial services providers needing to contact your client if you present their claim accurately, with specific and not generic details. You must be honest, transparent and not misleading when advising clients about being contacted by their financial services provider about their claim.

5. Revised guidance

We have very recently issued a special bulletin on transferring or ending client relationships and will be issuing more guidance and bulletins shortly.

5.1 Advertising and marketing guidance

We will be publishing updated guidance about advertising and marketing claims management services to take into account changes to the Conduct of Authorised Persons Rules 2014 and the new Direct Marketing Association Code. We intend to issue the guidance in April.

5.2 Referral fee ban for personal injury claims

We have seen a range of different business models emerge following the implementation of the referral fee ban in April 2013. We will be seeking to highlight some of the pitfalls and non-compliant models in revised guidance and a bulletin which we also intend to issue in April.