Some claims management companies could temporarily avoid regulation under the Senior Managers and Certification Regime once it is implemented later this year, the Treasury has stated.
In a statement to the House of Commons yesterday (18 July) John Glen MP, economic secretary to the Treasury, said not all CMCs will have gained full authorisation under the Financial Conduct Authority by December 9 - the date at which the SM&CR will be implemented to the wider financial services industry.
Mr Glen said SM&CR will begin for these firms, which are currently operating in the market under temporary permissions, at the date they receive full authorisation from the regulator and not the date of December 9 at which the rules will apply to the wider industry.
The FCA is currently considering applications for authorisation from CMCs, an industry for which it took over regulatory control from the Claims Management Regulator at the beginning of April.
The regime has already rolled out to banks and insurance companies and after December 9 it will apply to all 47,000 companies the FCA regulates.
Under the SM&CR, anyone who holds a senior management function will need to be approved by the FCA and every senior manager will need to fill out a statement of responsibilities explaining what they are responsible for.
The FCA hopes the regime will help establish healthy cultures and effective governance in firms by encouraging greater individual accountability and establishing a new standard of personal conduct.
Mr Glen said: "Firms awaiting full authorisation, but previously regulated by the Ministry of Justice will have temporary permission to operate.
"Not all CMCs will have gained full authorisation by December 9 this year, so the commencement regulations confirm that the SM&CR begins for these firms on December 9 this year, or at the date at which they receive full authorisation if this is later."
The FCA has previously hinted at problem areas the regulator will consider when assessing a CMC's application for authorisation, including low levels of uphold rates for complaints submitted to the Financial Ombudsman Service and handling of client data.
Yesterday it warned CMCs would face regulatory action if they failed to legally process the LC&F client data.
This was after it became aware that CMCs had been offered the opportunity to buy data belonging to clients of failed mini-bond provider London Capital & Finance.
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