The Treasury and the Ministry of Justice have commissioned a review of claims management firms’ regulation, following concerns from consumers and affected sectors, particularly financial services.
The review will look at how to implement a much more rigorous regulatory regime, with a particular reference to the “high standards” applied to other regulated industries such as financial services.
The review will consider transferring claims management companies regulation to the Financial Conduct Authority. Currently, CMCs are regulated by the Claims Management Regulation Unit which is based in the Ministry of Justice.
Although the CMRU has recently received significant additional powers, evidence suggests that CMC regulation regime should be “put on a more robust footing to be in a position to meet future regulatory challenges”.
Other points the review will be considering is whether the CMRU should have new powers and resources, whether there should be dual regulation between the FCA and the CMRU and whether a new independent regulator should be created.
The Treasury added that consumers and affected sectors, particularly financial services, remain concerned that CMCs continue to “fuel speculative claims” for compensation, and in doing so create a “significant social nuisance” through the use of cold-calls and texts and add waste into the redress systems.
It was announced in the summer Budget that Carol Brady, chairman of the Chartered Trading Standard Institute Board, will lead a review of the regulation of CMCs, which is due to be completed by early 2016.
The closing date for submissions is 13 November 2015.
ruth.gillbe@ft.com
