Many companies that deal with financial compensation claims on behalf of consumers and receive a payment for their service, may cease trading due to new regulations.
It has been estimated that up to 80% of claims management firms (CMCs) could close as their regulation has now been assigned to the Financial Conduct Authority (FCA).
CMCs will now have to register with the FCA and abide to FCA strict conduct of business rules.
There is good and bad with CMCs:
Equally, for many CMCs:
CMCs now need to apply to the FCA for temporary authorisation, then in the next coming weeks will have to follow the full FCA authorisation procedure, very similar to ones that saw many debt management companies cease trading. The FCA has reported over 900 CMCs have already applied for the temporary permission to continue to operate.
The following rules apply in England, Scotland and Wales:
Some CMCs do help consumers with mis-sold financial products and there is clearly a need but equally both consumers and the finance industry itself need to be protected from claims management cowboys. That said, as Chartered Financial Planners that have studied long and hard to achieve degree level education and qualifications in financial services (on top our usual education routes), we are tired of CMCs and indeed ombudsman adjudicators having little or no financial services knowledge or qualifications. How can the unqualified judge the qualified?