As reported recently the date for the Ministry of Justice (MOJ) to be replaced by the Financial Conduct Authority draws closer; to be exact the 1st April 2019. Claims Management Companies (CMC) who wish to continue trading must register for Temporary Permission (TP) by 31st March 2019.
CMC´s who already have approval from the MOJ, will not automatically transfer to the FCA they will need to register, at which time they will receive a new Firm Registration Number (FRN). After temporary permission is granted, they will need to apply for full authorisation.
There are two different application periods which are dependent on the type of activity therefore the CMC will have to confirm which activities they will be carrying out (lead generation or advising, investigating and representing). This will enable the FCA to confirm when your firm will have to submit its application for full authorisation.
Application 1 is from April to May 2019 and applies to CMC´s who only deal with financial products and service claims.
Application 2 is from June to July 2019 and is for CMC´s who operate in all other sectors but also includes claims products and lead generation.
If a company has not registered for Temporary Permission, then they will have to stop regulated claims management activities. If any CMC continues without authorisation they will face enforcement action through the civil or criminal courts for unlawful activity.
The FCA have set out clearly what is expected from the CMC´s in order for them to provide a good, high quality service, thereby rebuilding trust with the consumers and helping people pursue legitimate claims. CMC´s will have to provide customers with documents that details any fees that could be charged, including ombudsman services, CMC rates and costs. No contracts can be agreed until all pre contract documents have been provided and read.
The FCA are responsible for regulating financial services which play a critical role in the lives of everyone in the UK, from children’s ISA´s to pensions, debit and credit cards, loans to investments and the correct functioning of these markets has a fundamental impact on all of us.
The three main areas of focus for the FCS are:
Customers – they want customers to be empowered and confident in choosing a value for money service which is appropriate.
CMC´s – must assist customers to secure redress in such way that complies with their rules and meets a common set of standards
Regulatory – the FCA will regulate by prioritizing high standards of conduct thereby improving public confidence in claims management services.
The FCA is an independent public body funded by fees it charges to the firms it regulates. Once the FCA has authorised a firm it will keep checking them to make sure these firms are meeting the standards they require and complying with their rules. If standards are not maintained the FCA has a range of powers, firstly giving them the opportunity to address the issues but could ultimately result in imposing an enforcement sanction, such as a financial penalty.