Claims management companies: our regulation

The focus of our regulation of claims management companies is on driving up standards of conduct and boosting consumer protection. We want CMCs to be trusted providers of high quality, good value services that help people pursue legitimate claims for redress.

We have 3 main areas of focus:

• Customers – We want customers to be empowered and confident in choosing a value-for-money service which is appropriate for their needs.
• CMCs – We want CMCs to help customers secure redress in a way that complies with our rules and be authorised so that they meet a common set of standards.
• Regulatory – We want to regulate in a way which prioritises high standards of conduct and improves public confidence in claims management services.

There is a significant shift in the kind of regulation firms will now face. Under the FCA, there will be some rules and requirements that will be similar to the former regulator’s rules and requirements.

About the FCA regime

It is important to make sure your firm can meet and maintain our standards, and is able to cope with the changes. This will be necessary whether you have been authorised for a long time, or whether you are entering regulation for the first time (eg, firms operating solely in Scotland, or firms who solely handle claims in relation to Section 75 of the Consumer Credit Act). There are several elements to the FCA’s regime that you need to be familiar with. These are explained in more detail:

Entering FCA regulation

• temporary permission
• firms entering claims management regulation for the first time 
• fees that CMCs will need to pay

Full authorisation

• apply for FCA authorisation
• CMCs already authorised by the FCA

Our rules

• FCA standards and rules
• personal accountability of individuals

After authorisation

• what happens after a firm is authorised
• complaints about CMCs

Who needs to be authorised

Some activities you may want to carry out as part of your business now require you by law to have approval from the FCA. Different types of activity may require different ‘permissions’. 

You may see the terms ‘permission’ and ‘authorisation’.  Authorisation is the process you will go through for the FCA to grant you permission to carry out regulated activities. See how to apply for authorisation.

Any claims management company constituted under law of part of Great Britain (ie, England, Wales and Scotland) or serving customers in Great Britain must have permission to carry out regulated activities by the FCA.

Under the regime operated by the Claims Management Regulator (CMR), there was a single permission for all regulated claims management activity across 6 sectors. This means an authorised CMC can do any regulated activity in any of the 6 sectors: 

• financial services and products
• personal injury
• housing disrepair
• specified benefit
• criminal injury
• employment

One of the main changes of the transition to the FCA is that there are 7 separate permissions in total:

• 1 permission for lead-generation activities (irrespective of the CMC sector), and
• 1 permission for each sector listed above (6 in total) covering the activities of:
  • advising a claimant
  • investigating a claim
  • representing a claimant

Depending on which activities the firm performs, and in which sector they bring claims, some CMCs may only need 1 permission, but others may require several.

Firms previously regulated by CMR

CMCs previously regulated by the CMR, and that wished to continue trading, had to register for temporary permission by 31 March 2019. Firms that registered must now apply for authorisation in 1 of 2 application periods. See our authorisation page to find out more.

Firms entering claims management regulation for the first time

The laws that were created to transfer regulation of claims management to the FCA also made some changes to which firms are regulated. This means some firms will be entering regulation for the first time. This mostly relates to:

• firms that are incorporated in Scotland, and only serve Scottish customers, or
• firms that only handle claims about Section 75 of the Consumer Credit Act 1974

These firms had to register with us for temporary permission to continue operating by 31 March 2019.

They must now apply for authorisation in application period 1, which will be open from 1 April to 31 May 2019. This is when we will assess whether or not the firm meets our requirements and conduct standards.

• firms that wish to start claims management activity from 1 April 2019

These firms will need to submit their application to the the FCA, paying 1 application fee. This means that they must not perform any regulated activity until their application has been determined.

CMCs that are already authorised by the FCA

Firms already authorised by the FCA (firms with Part 4A permissions) will need to apply for a variation of permission (VoP) to add claims management as a permission.

These firms only pay 50% of the application fee, because we have already established that they have satisfied our Threshold Conditions (the minimum standards for authorisation), reducing our authorisations process.

You will have to apply for VoP in the correct application period, otherwise you'll lose your temporary permission for CMC activity. You would still retain your authorisation status for any other FCA-regulated permissions.