Claims Companies Must Improve Advertising Standards

The Financial Conduct Authority (FCA) has introduced new rules for Claims management companies (CMC’s), and has said “Improvements to advertising standards must be done to make sure customers are not mis-lead".

CMC Firms must:

• Identify themselves as claim management companies
• They must state clearly that if a claim can be made to a statutory ombudsman/compensation scheme it can be done without the assistance of a CMC and the consumer would not incur a fee.
• Provide clear information to a customer relating to fees they would need to pay when using the term, No Win No Fee or a similar term.

The new rules will help consumers make a choice whether to engage a CMC.

Executive Director of Supervision – Retail and Authorisation’s at the FCA, Jonathan Davidson remarked:

"The FCA has reviewed CMCs advertising and promotional material and have been taking necessary action on firms that mis-lead clients".  The following examples are not acceptable on promotional advertising:

• Failure to identify themselves as a claims management company CMC
• Important information not being prominent and being hidden or as small print.
• Providing case studies of high compensation claims, when the average amount of a claim was lower
• Giving the impression customers will get a better outcome if they use a CMC
• Failure to state that a customer does not need to use a CMC and could claim without using a CMC meaning they would not have to incur fees.

The FCA will take action against CMC’s if they do not abide to the new rules.