The only way is the FCA
The Financial Conduct Authority (FCA) recently published draft rules outlining how it will regulate claims management companies (CMCs) when regulation passes to them on 1 April 2019.
It caught my eye because come August next year the PPI deadline will hit the industry and I expect the volume of CMCs will fall rapidly after this point. From one point of view the timing may be considered a little late, but that doesn’t mean the rules shouldn’t be established and put in place to protect those that will continue to pursue claims up until the deadline. It is not beyond the realms of possibility that there will be a deluge of claimants as the deadline looms and they all need protecting. It was heartening to see a can-do attitude being enforced.
However, the big unknown at this point in time is, as ever, around whiplash reforms. If the Civil Liability Bill is passed as proposed, then low value RTA related claims, could become a new growth area for those CMCs forced out of PPI claims.
But, the point isn’t about the survival of all CMCs, the point is the welfare of the consumer. CMCs should play a role in helping consumers navigate an often, alien industry, at a difficult time. They shouldn’t be hard nosed call centres just hitting call volumes with little regard for the wellbeing of those they’re contacting.
The new rules outline that CMCs will need to highlight any free alternatives to using the CMC, such as ombudsmen schemes, and that those that buy so-called ‘lead lists’ from third parties will be required to carry out due diligence to ensure that the leads have been obtained legally. The FCA is also proposing that CMCs will have to record and keep all calls with customers for at least 12 months.
This is good business practice which goes beyond the financial services sector and should apply to all of us who deal with consumers.
I strongly welcomed Andrew Bailey’s vision he set out when he said:
“A well-functioning claims management sector can help to provide justice and redress to people who have suffered harm. But the market doesn’t always work as it should and poor conduct persists across the sector.
“We want CMCs to be trusted providers of high quality, good value services that can truly help consumers. A key element of our approach to regulation will be ensuring that consumers are both protected and treated fairly. The proposals we have outlined today are integral to achieving that aim.”
We echo his sentiments and have done for some time. At First4Lawyers, being a source of expertise to those who contact us is fundamental to how we operate. Our ethos is very much about looking after the injured person, we stand strongly against cold-calling and call out those industry-wide, regardless of sector, who prey on the vulnerable and operate well outside of what are considered to be good business practices.
We welcome this change in regulatory body. There have been too many firms that have flouted the rules for too long and gone unpunished. Hopefully the FCA will now be able root out these rotten few and provide the industry with the credibility that so many of us operating in it deserve.
