On 26 October 2020, the FCA issued its warning to CMC firms regarding their steps taken to fully investigate the merits of each potential claim before pursuing it.
The FCA letter notes that a failure to collect relevant information before presenting claims to third parties has led to the submission of 'spurious claims, slower processing, and poor outcomes'.
The letter provides an insight into the FCA’s main concerns regarding the claims management sector, which it assumed responsibility for regulating in April 2019.
What it means for you
The regulator states that CMCs have demonstrated a ‘poor understanding of, and sometimes attitude to, their regulatory obligations’, the letter states. ‘We expect CMCs to have a good understanding and regard to the requirements applying to them, take a pro-active approach to regulatory compliance, and deal with the FCA in an open and co-operative way.
Other problems identified include misleading, unclear, and unfair advertising, unclear fee structures, poor disclosure of pre-contractual information, and poor service standards.
MEMA has extensive successful experience in guiding all types of firms through the FCA application process so can speak to many of the issues raised in the Dear CEO letter.
We will begin to release a series of useful articles on our site such as understanding FCA Threshold Conditions, submitting regulatory returns, FCA correspondence, and dealing with other aspects mentioned in the letter.