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.