Claims firms will have to clearly spell out their fees and direct customers to free alternatives BEFORE they sign any contracts, under new plans proposed by the financial regulator.
From 1 April next year the Financial Conduct Authority (FCA) will take over responsibility for regulating claims management companies, such as those that claim for PPI and personal injury, and it’s this week set out how it plans to overhaul regulation of them.
For the first time claims firms in Scotland will be regulated – currently they’re not – and under the FCA’s plans customers will have to be given a summary of key information before they can agree to let the firm claim on their behalf.
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What are the proposals?
The FCA is consulting on a number of rules it wants to introduce, including that firms must:
- Tell customers of free alternatives. This could include ombudsmen schemes, and would be included in marketing material and any information given to the customer before they sign a contract.
- Give a short summary of key info beforehand. This would be given before customers sign contracts with the firm and would spell out the fees and the services customers would get in return.
- Check that customers’ details have been obtained legally. Firms which buy so-called ‘lead lists’ must ensure the data included in them has been obtained legally, and keep records of its checks.
- Record all calls. Firms would have to record and keep all calls with customers for at least 12 months.
What does the FCA say?
Andrew Bailey, chief executive of the FCA, said: “A well-functioning claims management sector can help to provide justice and redress to people who have suffered harm. But the market doesn’t always work as it should and poor conduct persists across the sector.
“We want claims management companies to be trusted providers of high-quality, good-value services that can truly help consumers. A key element of our approach to regulation will be ensuring that consumers are both protected and treated fairly. The proposals we have outlined today are integral to achieving that aim.”
The FCA consultation will run until 3 August and is open to claims firms, trade bodies, authorities involved in regulating businesses and consumers who use or are considering using claims firms.