The Financial Conduct Authority (FCA) is introducing a fee cap on the fees that claims management companies (CMCs) charge customers when they claim for financial products and services. The proposed fees cap will be between 15% and 30% cap.
FCA research indicates that some consumers have paid more than 40% in fees.
When a consumer is awarded monetary redress, the cap will apply to all claims apart from PPI claims as Parliament has already set a 20% price cap.
Information must be given by CMCs before consumers enter into a contract such as key information about fees and better advertising to the free alternative routes of redress available. This is to help consumers make better informed decisions about using CMC services.
CMCs currently managed 4 financial services or products excluding PPI.
A policy statement is expected to be published in Autumn 2021. The consultation is open until 21st April 2021.
30% fee is still high in our opinion.