FCA Set To Improve Professional Standards of CMCs
As of April 2019, The Financial Conduct Authority‘s officially took over the regulation of claims management companies. The aim of this is to protect consumers from the ‘rotten apples’ of the sector. By the FCA taking responsibility for this, they hope to drive up standards and better the professionalism with the industry.
Any company not authorised after the 1st April 2019 could not legally make a claim for anyone. Any company that wished to continue trading must have applied for temporary permission by 31st March. The watchdog’s new approach was seen to be immediately encouraging. Data from April showed over 900 claims management companies had already registered to continue trading while they seek full authorisation from the FCA. However, just because a company received temporary permissions from the FCA, it does not mean they will receive approval straight away.
CMC’s must meet a new set of requirements set by the FCA, being assessed on experience, skills and suitability throughout the application process. The end goal is for CMC’s to be ‘professional providers of quality service’.
New requirements include:
- Informing customers of free alternatives, such as the Financial Ombudsman Service (FOS) or the Financial Services Compensation Scheme (FSCS).
- Customer telephones are recorded and retained for a year after their final contract, to avoid forceful sales techniques and monitor customer complaints.
- All customers must be provided with a summary document before any contract is signed, including clear and upfront information about fees and services.
- Due diligence on lead generation and rules to prevent firms encouraging customers to make fraudulent, frivolous or vexatious claims or claims which have a no-good basis
Jonathon Davidson, FCA’s Executive Director of Supervision, Retail and Authorisations was very confident with the FCA’s new approach. He said, “as in many regulatory issues, it is often a few bad actors that tarnish the reputation for the many, and our aim as a regulator is to come down on them very hard”. The watchdog claimed that such rogue companies would be identified straight away, and any firms with high levels of complaints will come under scrutiny. Various timeshare claim companies are likely to be affected by the FCA’s new regulations, due to the way they operate. The FCA wants customers to feel valued, empowered and confident. Any companies that are regularly cold calling and using forceful sales techniques are likely to be under investigation.
The new approach by the FCA will rebuild the trust with consumers, and help people to pursue legitimate claims. Jonathon Davies said he believes that customers will be protected from claims management cowboys and get a better deal. Over the coming months, we are expected to see an increase in the number of rogue companies being closed down due to the way they operate, all to benefit the consumer.
If you need to seek advice regarding your timeshare contract, here at Athena Law, we offer a free, initial consultation. We will go over the details of your particular case and advise you on whether you have a viable claim. Over the years, we have represented hundreds of timeshare owners. Our team is made up of highly qualified and experienced solicitors, who will take a personal approach to meet your objectives. For more information, please visit our website, call on 0161 839 8847 or email [email protected]