FCA to regulate claims management companies

The Financial Conduct Authority will take over regulation of claims management companies to get "tougher" on the sector.

The Financial Conduct Authority will take over regulation of claims management companies to get "tougher" on the sector.

Currently the Ministry of Justice is in charge of regulation.

The government said: “The new regime will be tougher and will ensure claims management company managers can be held personally accountable for the actions of their businesses.

"In order to ensure that the new regulatory regime is implemented effectively, the government intends to transfer responsibility for regulating claims management companies to the Financial Conduct Authority."

Thegovernment was responding to recommendations made in a review by Carol Brady, chair of the Chartered Trading Standards Institute.

Martin Milliner, GI claims director at LV=, said: “We wholeheartedly support the news that the FCA is to regulate claims management companies.

"However, for it to be effective we urge the government to ensure that the regulator is not just ‘another name over the door’; the FCA needs more funding and resourcing than the claims management regulator received under the Ministry of Justice.

"With greater powers there should be greater enforcement and the FCA should introduce larger fines and have the ability to criminalise the behaviour of rogue claims management companies that are the heartbeat of our compensation culture.

"CMC directors and senior managers should also be subject to the same approvals process as other leaders of financial services organisations; under the recently introduced senior insurance managers regime.”

Fiona Hoyle, head of consumer and mortgage finance at the Finance & Leasing Association, said: “After many years of campaigning for a more robust regulatory regime for claims management companies, we welcome the government's decision to ask the FCA to apply such a regime so that CMC customers can be confident of fair treatment.”