FCA warns consumers of scams by unauthorised CMCs

FCA warns consumers of scams by unauthorised CMCs

The Financial Conduct Authority has warned consumers about unauthorised claims management services claiming they can write off debts but charging fees to do so.

The regulator believes there are firms offering unauthorised claims management services, mainly targeting mortgage holders, that charge a fee to ‘write off’ debts and get compensation for consumers from their lenders. 

The FCA said these scams expose people to significant losses as the fraudsters charge an initial fee and might add more fees, even when the scheme fails. 

Specifically, the FCA said these firms might try to convince individuals by pointing to ideas such as 'Strawman', 'Freeman of the Land' and 'Sovereign Citizen' with the aim of promoting the belief that the laws of a country have no power over people.

The watchdog said fraudsters use these ideas to appeal to people facing financial difficulties who may be looking for a way out of their debt.

Almost all firms and individuals offering claims management services in the UK must be authorised by the FCA.

The regulator has advised consumers to check the financial services register to make sure the firm is authorised and has permission for the service it is offering.

The FCA also said that if a consumer has been contacted unexpectedly by a business or individual, they should make sure to call them back using the contact details listed on the register, as it may be a fraudster impersonating the registered firm or individual. 

If a consumer uses an unauthorised firm they will not have access to the Financial Services Ombudsman or the Financial Services Compensation Scheme if things go wrong, meaning they will be unlikely to get their money back if the firm fails. 

The FCA also warned that if a consumer stops making repayments on their debt, they can face action from their lender. This could include debt recovery and repossession of their home.

It warned that these sort of scams often increase in times of economic hardship and can involve vulnerable victims who are already struggling financially.