Comment on the FCA's Consultation on New Rules

Andy Kay, director of operations at First4Lawyers, comments on The Financial Conduct Authority’s (FCA) consultation on its new rules for regulating claims management companies. 

“First4Lawyers has always advocated high levels of consumer protection. Anything being done to improve the standards of those offering claims management services is a good thing. However, we are concerned about the FCA’s 'one size fits all' approach to regulating CMCs.

“It is CMCs operating in financial services – and particularly in payment protection insurance (PPI) claims – that cause the vast majority of complaints to the current regulator (95%, according to the Legal Ombudsman).

"And with the deadline for PPI claims set less than five months after regulation transfers to the FCA, we feel that this action is probably being taken too late to have a positive impact for those consumers who have been hardest hit.

“We would also like to see clarification from the FCA around the regulation of insurance companies in relation to their claims management activities – amidst all the sound and fury from insurers about the activities of CMCs and claimant lawyers, it is often forgotten that they do more of this than most. We have long held the view that general insurers, specifically motor insurers, should be subjected to the same regulatory burden and be required to obtain separate authorisation to carry out CMC activities.

“It is standard practice among all motor insurers to offer accident management services to innocent third parties that are involved in accidents with their own policyholders. With no policy of insurance or contract in place between them, this is clearly captured as a regulated claims management activity, for which the insurer should be subject to separate regulation and fees.

“We trust that the final rules will address and deal with this matter and that all motor insurers providing intervention services will fall under the same CMC regulatory regime and be required to share the same regulatory costs as all others offering claims management services.”