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Claims Management Companies and High Cost Lenders

In a recent post, the FCA has released its views urging Claims Management Companies and High Cost Lenders to work better together

In its statement, the FCA acknowledges there has been tension between HCL and CMC firms. Some causes of the tension follow:

  • HCLs identified instances of a CMC having presented a claim, but the HCL insists that the customer had never taken out a loan with them.

  • HCLs suspend lending to clients who bring complaints while the claim is being investigated, potentially denying those customers an important source of credit. Faced with this, some customers may withdraw the complaint, possibly resulting in the CMC charging the customer a cancellation fee.

  • Some HCLs expressed concern that CMCs are using 'catch all' letters of authority (LoAs) to pursue claims against more than one HCL rather than ensuring that a customer agrees to a separate LoA for each HCL against which a claim is being made.

  • Some CMCs expressed concerns that HCLs’ checking of LoAs may be excessive and deliberately being used to hinder a customer’s ability to progress their complaint using a CMC.

  • Some HCLs appear to be unwilling to share information efficiently – for example by agreeing on streamlined claims processes – with CMCs who are exploring potential claims.