Independent report

Review of Claims Management Regulation: terms of reference

Published 2 October 2015

This independent report was withdrawn on

This page has been withdrawn because it’s out of date.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

© Crown copyright 2015

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1. Introduction

Claims management companies (CMCs) are regulated by the Claims Management Regulation Unit (CMRU) which is based in the Ministry of Justice. The CMRU has recently received significant additional powers, but evidence suggests that CMC regulation regime should be put on a more robust footing to be in a position to meet future regulatory challenges.

Consumers and affected sectors, particularly financial services, remain concerned that CMCs continue to fuel speculative claims for compensation, and in doing so create a significant social nuisance through the use of cold-calls and texts and add waste into the redress systems.

As a result, HM Treasury and the Ministry of Justice have decided to jointly commission a review into how to implement a much more rigorous regulatory regime for CMCs, with particular reference to the high standards applied to other regulated industries such as Financial Services.

2. Objectives and focus

To make recommendations to HM Treasury and the Ministry of Justice on reforms to the regulatory architecture for CMCs which will lead to consistently improved outcomes in the way that CMCs conduct business. In doing so, the review should consider how to improve consumer protection and mitigate the wasteful impact of poor conduct and service on those businesses which are subject to claims from CMCs.

Specifically, it should consider the resources and powers required for a strengthened regulatory regime – including the power to implement the cap on charges that CMCs can apply to their customers - and what architecture might be most appropriate to deliver this, including its governance and scope.

The review may consider, but is not limited to recommendations on:

  • Further reform of the existing regime, with new powers and resources provided to the CMRU;
  • dual regulation between the CMRU and the Financial Conduct Authority (FCA);
  • creation of a new independent regulator; or
  • transfer of responsibility for regulation of CMCs to the FCA.

3. Leadership

The review will be led by Carol Brady, a non-executive director of the Claims Management Regulation Board and Chair of the Trading Standards Institute. She will be supported by a secretariat drawn from staff at HM Treasury and the Ministry of Justice.

4. Time frame

The review will make final recommendations to HM Treasury and the Ministry of Justice in early 2016.

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