FCA warns ambulance chasers over client data

FCA warns ambulance chasers over client data

Claims management companies have been offered the opportunity to buy data belonging to clients of failed mini-bond provider London Capital & Finance, according to the regulator.

In a statement published today (July 18) the Financial Conduct Authority warned CMCs would face regulatory action if they failed to legally process the LC&F client data. 

The FCA assumed control of CMC regulation at the beginning of April, taking over from the Claims Management Regulator, and warned any non-compliance when handling LC&F clients would jeopardise a company's authorisation process under their new regulator. 

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This comes after it emerged in May CMCs were targeting clients of failed British Steel adviser Active Wealth in a bid to bring claims against the firm, leading to two firms being referred to the regulator over alleged rule breaches.

One of the CMCs was found to have approached Intelligent Money, a provider of investments and self-invested personal pensions, with a 'subject access' request without the clients' knowledge.

The other cold-called a British Steel worker involved in the pension debacle, and turned up on the steelworker’s doorstep within 24 hours of the call. It is unclear where they got the client data from.

LC&F went into administration in January owing more than £230m and putting the funds of some 14,000 bondholders at risk.

LCF had signed clients up to fixed-rate Isas promising 8 per cent interest, with investors' capital then invested into mini-bonds used to issue loans to small businesses.

Shortly before its collapse the Financial Conduct Authority ordered the company to stop marketing its fixed-rate investment bonds and Isa products and the provider had its assets frozen by the regulator.

Last month the Financial Services Compensation Scheme confirmed it had found evidence of misleading advice given to customers of the mini-bond provider, meaning clients could potentially be entitled to compensation under the scheme. 

Although the life-boat scheme said it needed more time and information before accepting any claims under LC&F, it confirmed the funding would "most likely" be levied on intermediaries. 

In today's statement the FCA also urged CMCs to apply for authorisation under the regulator before the second deadline of July 31, warning firms that miss the cut off point will have 30 days to wind down their regulated claims management activity. 

In April the financial regulator confirmed more than 900 CMCs had already registered to continue trading while they go through the authorisation process, with the FCA promising to "drive up standards" in the sector and bolster consumer protection. 

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