Guidance

CMR Bulletin 36

Published 1 February 2019

This guidance was withdrawn on 1 April 2019

This page has been withdrawn because it’s out of date.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.

1. Financial Conduct Authority – Temporary Permission

On 1 April 2019, the Financial Conduct Authority (FCA) becomes the regulator of the claims management industry as provided for in the Financial Guidance and Claims Act 2018. In order for you to remain authorised to provide claims management services and continue operating from 1 April 2019, you must submit a completed application for temporary permission to the FCA. You must do this via the FCAs Connect portal by midnight on 31 March 2019.

If you do not submit a completed registration form by 31 March 2019 you will not be able to carry out regulated claims management activity after that date. You should not leave it to the last minute to register to avoid any potential problems or delays.

Once registered for temporary permission, you will need to submit an application for full authorisation during one of two application periods between April and the end of July – you will be notified of the dates relevant to your business upon receipt of your application for temporary permission. The FCA have published a video about temporary permission, timeline for regulation and further information is available on the FCA website.

2. FCA regulation – how it will regulate CMCs

In December, following a number of consultations during 2018, the FCA published its Policy Statement (PS18/23) which set out the conduct, rules and fees it will apply to CMCs from April 2019.

CMCs that intend to remain in the market and move into the FCA regime should start preparing for the change now. The first step is to read and understand the Policy Statement and what it means for you.

Further updates, information and resources are available on the FCA’s CMC webpages.

3. Exiting the claims market

If you do not intend on applying for temporary permissions before the end of March 2019 and instead plan to exit the market, please consider steps you should take prior to 1 April 2019. If you have existing clients that you will no longer be able to represent or are considering transferring clients to another representative, please read the guidance issued in March 2015 on ending or transferring client relationships.

If you have any queries or require any further advice or guidance about leaving the claims management market and steps you should take, please contact us as soon as possible (contact details below).

4. Complaints about CMCs

As well as the regulation of CMCs moving from CMR to the FCA, from 1 April 2019 the organisation that will consider complaints about CMCs will also change from the Legal Ombudsman to the Financial Ombudsman.

The Legal Ombudsman will still accept complaints up to 31 March 2019 so when responding to complaints prior to this date, you should continue to signpost to the Legal Ombudsman should the client not be satisfied with your response.

From 1 April 2019 you should include details of the Financial Ombudsman only. In the weeks leading up to the transfer, you may wish to include the details of both organisations, making it clear that if the client is not satisfied with your response, then they should make their complaint to the Legal Ombudsman if it is before 1 April 2019, but to the Financial Ombudsman if their complaint is made after 1 April 2019.

5. Data Subject Access Requests

There has been an increased use of Data Subject Access Requests in recent months. We would like to highlight some of the risks and our concerns with some of the practices we have seen.

Routine use of Data Subject Access Requests will result in you holding vast amounts of clients’ personal data. Any organisation holding personal data has responsibilities under legislation that the Information Commissioner’s Office regulates and this data must be processed in accordance with the General Data Protection Regulation and the Data Protection Act 2018.

In order to mitigate these risks, we would recommend that you carefully consider what information you require in order to make a complaint, whether there is an alternative method of obtaining this information and/or specify in the request what information and documentation you require.

You should also carefully consider the scope of the Letter of Authority you are asking your client to sign. We have seen some authorities that are not sufficiently clear and/or specific. It is evident from the contacts that we have received that many clients have not understood the range of information that the CMC will access or the type of complaint(s) that the CMC will pursue on their behalf. In some cases, this has resulted in the complaint being withdrawn by the client, for example, where a client thought that the CMC was pursuing a PPI complaint on their behalf but a PBA complaint was submitted instead.

CMCs must ensure that documentation is clear, transparent, fair and not misleading (Client Specific Rule 1c) and that efforts are made to ensure that the client understands and properly consents to the information the CMC is accessing on their behalf.

6. …and finally

With regulation moving to the FCA in April, this will be the final CMR bulletin. From 1 April, the CMR website will no longer host the material and information currently held in relation to CMC regulation. Information and resources relating to the new regime will be published by the FCA on their CMC webpages.

If you have any queries or require any advice up to 31 March 2019 about your existing requirements and obligations, please continue to contact us on 0333 200 0110 or business@claimsregulation.gov.uk

We’d like to take this opportunity to thank everyone who has co-operated, supported and worked with us over the last 12 years.