Claims management company regulations, guidance and legislation

Regulations for companies handling compensation claims for injuries, employment issues, mis-sold financial products or housing disrepair.

This guidance was withdrawn on

This page has been withdrawn because it’s out of date.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

Authorisation for claims companies

Any claims management company (CMC) working in the following sectors must be authorised by the Claims Management Regulator (CMR):

  • personal injury
  • financial products and services
  • employment
  • criminal injuries compensation
  • industrial injuries disablement benefit
  • housing disrepair

This is a legal requirement and it’s an offence to provide these services without being authorised unless your business is exempt.


Some businesses don’t need to be authorised. These include:

  • insurance companies, brokers and Independent Financial Advisers
  • solicitors, barristers and legal executives
  • charities and advice agencies
  • certain introducers whose main business isn’t managing claims
  • independent trade unions dealing with members - as long as they follow the code of practice

View guidance on which businesses need to be authorised.

Applying for authorisation

CMCs need to pay a one-off application fee, complete an application and pay an annual fee to be authorised.

Conduct rules

All authorised CMCs must follow the Conduct of Authorised Persons Rules 2018 that set out certain rules and standards around:

  • running a business
  • advertising and marketing
  • taking on business
  • representing clients

The Regulator has produced guidance in relation to the rules.

Interim fee cap

The interim fee cap is now in force.

On 10 May 2018, the Financial Guidance and Claims Act 2018 (“the Act”) received royal assent. From 10 July 2018 the Act prohibits fees of more than 20%, exclusive of VAT, being charged for Payment Protection Insurance (PPI) claims and restricts CMCs and legal services providers from charging the client where no award has been recovered.

To help CMCs understand the rules of the fee cap, the regulator has produced guidance on:

  • The effect of the interim fee cap on CMCs
  • Requirements for compliance
  • Regulatory enforcement
  • Other measures that will impact CMC’s charges on client fees.

Client account rules

Authorised CMCs that handle client money must follow Client Account Rules 2006.

As part of these rules, you need to send annual accountant reports to the regulator. The documents below are designed to help you with this:

If your clients pay fees by instalments, you may need a consumer credit licence. More information is available from the Financial Conduct Authority.

Complaints handling

From 28 January 2015, the Legal Ombudsman will be able to deal with complaints about CMCs. All CMCs must establish written complaints handling procedures that follow the Complaints Handling Rules 2015.

For more information read our guidance or visit the Legal Ombudsman website.

Enforcement policy

The enforcement policy outlines how the regulator approaches enforcement and the actions available to tackle non-compliance.

Financial penalties

From 29 December 2014, the regulator will be able to impose financial penalities on CMCs that have breached the conditions of their authorisation. The regulator has produced guidance on:

  • the circumstances in which the regulator can impose a financial penalty
  • how a financial penalty will be calculated
  • the range of financial penalties that may be imposed

Read the financial penalties scheme guidance.

Marketing and advertising guidance

The regulator has produced detailed guidance around the different marketing methods used by the industry, covering:

  • telemarketing
  • using auto diallers and silent calls
  • using automated messages
  • SMS and email marketing
  • websites and online privacy

Read the marketing and advertising guidance.

PPI claims guidance

To help CMCs understand the rules in the area of mis-sold PPI claims, the regulator has produced guidance on:

  • rules around testimonials and what makes a misleading statement
  • letting clients know about the Financial Ombudsman scheme
  • how to ensure fee structures are fair and transparent

Read the handling mis-sold PPI claims guidance.

Plevin guidance

In March 2017, the Financial Conduct Authority (FCA) announced new rules and guidance on the handling of PPI complaints in light of the Supreme Court’s decision in Plevin v Paragon Personal Finance Limited. These came into effect on 29 August 2017.

Read our supplementary guidance on the rules and expectations when handling cases relating to Plevin.

Professional indemnity insurance (PII) guidance

PII covers your business if a client claims to have suffered a loss due to your professional negligence.

You only need this cover if your business represents clients in personal injury claims or if your business is going to be doing this.

If you already have a PII policy because you act as an insurance intermediary, check with your insurer to see that the policy covers claims management work.

Referral fees ban

It is a regulatory offence to pay or receive referral fees in personal injury cases.

This means that you must not receive payments for giving details of any client to a solicitor who offers legal services to claim for personal injury damages. You can carry out other work for a solicitors for a fee.

If your business refers a personal injury claim and receives payment for it:

  1. You’ll be in breach of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 and the business conduct rules.
  2. CMR will contact you and explain what rules you are breaking.
  3. Your authorisation could be suspended or cancelled if you don’t start following the regulations.
  4. If your business loses its authorisation, you must stop offering claims management services immediately.

CMR, Solicitors Regulation Authority (SRA) and Financial Conduct Authority (FCA) enforce the referral fee ban. These organisations coordinate actions and share market intelligence.

You’ll find more detail on how each organisation monitors and enforces the ban:

Surrendering authorisation

From 9 December 2014 CMCs must get written consent from the regulator to surrender their authorisation if:

  • the regulator has given the business notice that it’s being investigated under Regulation 35
  • the business has been given a notice to provide further information or documents under Regulation 36 in relation to an investigation
  • the business has been notified that a warrant issued under Regulation 40 has been raised against it
  • the alleged non-compliant activity that led to the investigation, notice or warrant, took place on or after 9 December 2014

What an authorised CMC can expect from the regulator

  • We will write to you to let you know, when this restriction applies.
  • We will write to you within 7 working days of making a final decision to let you know if the restriction has been lifted.

How to surrender authorisation in all other circumstances

If the above conditions don’t apply, a CMC can surrender its authorisation without needing our consent. However, you must write to the regulator to let us know you want to surrender your authorisation.


Part 2 of the Compensation Act 2006 established the framework for regulating claims management services. The regulator acts in line with this legislation and follows the regulations and orders below.

Part 2 of the Financial Guidance and Claims Bill provides for the transfer of claims management regulation from the Ministry of Justice to the Financial Conduct Authority


The Compensation (Claims Management Services) Regulations 2006 cover arrangements for:

  • granting authorisation
  • exempting from authorisation
  • setting fees
  • handling complaints

They also cover the following areas for the regulator to:

  • require authorised persons to have PII
  • make rules for how authorised persons should carry out business
  • audit or investigate businesses

The Compensation (Claims Management Services) (Amendment) Regulations 2008 cover the need for CMCs representing clients in the personal injury sector to have professional indemnity insurance (PII).

The Compensation (Claims Management Services) (Amendment) Regulations 2014 cover:

  • restrictions on CMCs surrendering their authorisation
  • financial penalties for CMCs breaching the conditions of their authorisation

The Compensation (Claims Management Services) (Amendment) Regulations 2015 cover:

  • removal of the regulator’s powers to review complaints and order redress
  • power to share information with the Legal Ombudsman
  • circumstances in which the regulator can issue directions to CMCs


The Compensation (Regulated Claims Management Services) Order 2006 sets out the claims management services that are covered by the regulator. These include:

  • finding people making claims
  • advising clients
  • making representations

Compensation (Specification of Benefits) Order 2006 explains that a claim for a number of specified benefits, called industrial injury disablement benefits, shall be treated as a claim for the purposes of Part 2 of the Compensation Act 2006.

The Compensation (Exemptions) Order 2007 and Compensation (Exemptions) Amendment (No 1) Order 2007 set out which activities and businesses are exempt from authorisation.

Published 16 April 2014
Last updated 20 March 2018 + show all updates
  1. From 1st April 2018 authorised CMCs must follow the new Conduct of Authorised Person Rules 2018. New rules and guidance published.

  2. Changes to complaints handling rules. Addition of The Compensation (Claims Management Services) (Amendment) Regulations 2014

  3. Added guidance about how the Legal Ombudsman complaints handling scheme will work.

  4. Update on changes to how CMCs can surrender their authorisation

  5. New conduct rules added along with new conduct rule guidance

  6. First published.