Financial Services Compensation Scheme  

CMCs given green light to sign forms for clients

CMCs given green light to sign forms for clients

Claims management companies have been given the green light to sign application forms to the Financial Services Compensation Scheme on behalf of vulnerable and elderly clients during the coronavirus lockdown. 

In an update on its website the industry-funded lifeboat body confirmed it would now accept claim summary forms signed by a CMC where the client is self-isolating during the pandemic, or does not have access to a printer and scanner. 

But the FSCS made it clear the form must also be accompanied by written confirmation from the CMC that the client has "read and understood the terms" of the completed form and has given their consent for it to be submitted and signed on their behalf. 

The industry compensation scheme has also made changes to its terms of engagement for third parties, which CMCs and solicitors will be asked to agree to next time they log onto the online claims service. 

The FSCS is asking CMCs to only challenge decisions where they believe there is merit and to learn from previous answers FSCS has provided when bringing a claim.

The current rules also require CMCs which submit a pensions claim to provide a detailed summary of losses incurred by the client and, if claiming on a self-invested personal pension transfer, the names and policy numbers of all ceding pension schemes transferred into the Sipp. 

The FSCS also requires the full pension or Sipp statements showing all investments and transactions from the outset, with CMCs expected to "clearly state" if any of the supporting documentation cannot be submitted with the claim. 

The Financial Conduct Authority assumed control of CMC regulation last year, taking over from the Claims Management Regulator, and received requests from more than 900 companies to continue trading under the new watchdog.

In June last year the FCA fired warning shots over "problem cases" in the CMC sector, warning low uphold rates for complaints submitted to the Financial Ombudsman Service could work against a firm applying for authorisation under the new regulator. 

The watchdog also said it had seen a growing pattern of bogus claims where there was no relationship between the customer and the provider receiving the claim. 

rachel.mortimer@ft.com

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