Claims Management – FCA permissions

In April 2007, Claims Management Companies (CMC) in England and Wales, previously unregulated, came under the jurisdiction of the Ministry of Justice. CMCs based in Scotland and Northern Ireland remained unregulated – Scotland because this was an area of law that was devolved to the Scottish Parliament and Northern Ireland because the laws there relating to insurance claims are different in a number of significant ways.

From 1 April 2019, Claims Management becomes an FCA regulated activity and firms involved in claims management will need to have appropriate permissions and follow a significantly increased rules regime.

Full details of the requirements can be read in FCA Policy Statement PS18/23.

It is of interest to note that, at present, FCA regulation only applies to CMCs based in England, Wales and now extended to cover firms based in Scotland. CMCs based in Northern Ireland remain outside the FCA’s regulatory remit but consultations are taking place with the Financial Ombudsman Service around whether voluntary jurisdiction can be extended to firms in Northern Ireland. Meantime, CMCs in Northern Ireland cannot deal with clients residing in England, Wales or Scotland.

The new regulated activity of claims management is covered by six different permissions, depending on the nature of the claim – personal injury, housing etc. and one final permission relating to lead generation.

Of interest to our readers is the management of claims relating to financial products. The full definition of this regulated activity is:

“advice, investigation or representation in relation to a financial services or financial product claim” 

Historically, it would not have been unusual for an IFA, working with a new client, to identify a potential cause for complaint in relation to advice the client had received previously. And the adviser would often have helped the client to pursue that complaint. That is no longer possible unless the adviser/firm holds the relevant claims management permission.


Important Note: ATEB news is intended to provide general information ONLY. The content, including any views expressed or guidance provided, does not replace the need to comply fully with FCA Rules and Guidance. Unless you have discussed news article content with ATEB, and specifically how it relates to your circumstances, then ATEB disclaims all liability and responsibility and actions arising from any reliance placed upon it. For the avoidance of doubt therefore, any reliance you place on such information without our consultation is at your own risk.

ATEB Compliance offers compliance and regulatory advice.

ATEB Suitability provides report writing software for the financial services market.

Our View

This might seem to be a retrograde step, and create an obstacle to clients pursuing a complaint with assistance from their current adviser. But it is what it is. We believe it will still be appropriate for advisers to point out that the client could have grounds for a complaint against a previous firm but the adviser should not become more involved in progressing the complaint than that … unless the correct permission is held.

Action Required By You

  • Firms wishing to be able to assist clients with complaints should apply for a Variation of Permissions;
  • Contact your usual ATEB consultant or ATEB directly if you need more information.
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Technical Manager - Often referred to as the Oracle or the Sage, Alistair has a wealth of financial services experience. He is our go-to Technical Manager and enjoys nothing more than a complicated conundrum. Feel free to test his renowned knowledge by getting in touch.

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