HM Treasury has said it will go ahead with its plans to push claims management companies under the umbrella of the Financial Conduct Authority in April.
In April HM Treasury revealed its plans for the regime and it has now published the outcome of that consultation, which showed support for its proposals.
HM Treasury has now said it will draw up the rules and lay them before Parliament "in due course".
It decided these companies would fall under the remit of the FCA after concluding their current regulator lacked the powers and resources to regulate the market.
Claims management companies operate in a variety of sectors and one of the issues raised was whether "financial services and products" should be defined more specifically, given there is no existing legal definition.
But the Treasury said it had kept the definition broad on purpose because it did not want to create one which might limit the application of the new regime.
The rules will require that ambulance chasers have separate permissions depending on the specific activities and sectors with wish to operate in, including "advising, investigating and representing in relation to financial services and products".
As well as financial services there will be six other sectors claims management companies will be able to choose to operate in, including personal injury, employment, housing disrepair and industrial injuries disablement benefit.
A number of responses suggested additional sectors should be added to the scope of regime, particularly cavity wall insulation, aviation and timeshares, and HM Treasury stated these could be added at a later stage but it did not want to risk delaying the rules by doing so now.
Firms will need to be able to demonstrate to the FCA they have "suitable competency" for each sector in which they wish to carry on business.
HM Treasury has stated there will be exemptions to the regulations, covering legal practitioners, most charities and not-for-profit advice agencies, trade unions certified as independent, student unions and small scale introducers for whom this is incidental to their main business.
The decision to move claims management companies under the remit of the FCA was made in the 2016 Budget and will be done under a statutory instrument of the Financial Guidance and Claims Act.
The FCA will take over regulation of claims management activity on 1 April 2019 and the transfer of complaints handling to the Financial Ombudsman Service will take place at the same time.
damian.fantato@ft.com
