The Financial Conduct Authority (FCA) recently released its Portfolio Strategy on Claims Management Companies (CMCs) outlining its approach to regulating this sector and identifying key risks.
The strategy highlights several areas of concern, including CMCs with unclear communication with consumers about which products and services are regulated and those that are not firms that do not conduct or document appropriate checks when purchasing customer data or leads, and firms that fail to investigate the existence and merits of each element of a potential claim. Additionally, some CMCs are not submitting good quality returns on time, or not submitting them at all.
At MEMA, we have created a comprehensive and actionable plan that CMC firms must implement without delay in order to address the recent changes outlined by the FCA in its Portfolio Strategy.
Review the FCA's letter: The first step for any affected firm should be to thoroughly review the letter issued by the FCA outlining the key risks of harm, and the FCA's expectations of firms to mitigate these risks.
Assess current practices and policies: Conduct a thorough assessment of your firm's current practices, policies, and procedures to identify any areas of non-compliance with the FCA's regulations.
Provide training and education: Provide training and education to staff on the regulatory requirements and best practices for compliance to ensure that all employees are aware of their responsibilities and how to meet them.
Prepare necessary documentation: Prepare necessary documentation such as policies, procedures, and compliance manuals that are required by the FCA.
Implement a compliance monitoring program: Implement a compliance monitoring program to ensure that all policies and procedures are being followed and that the firm remains compliant with the FCA's regulations.
Monitor consumer outcomes: Monitor consumer outcomes to check whether customers are getting good outcomes and take action to address any issues that arise.
Prepare for Consumer Duty: Start preparing for the implementation of the FCA's Consumer Duty, which comes into force on July 31, 2023. This new duty will set a higher standard of care that firms should provide to consumers in retail financial markets.
Seek ongoing support (if required): Seek ongoing support from legal and regulatory experts to ensure continued compliance with the latest regulatory requirements and to address any issues that may arise.
Review and update: Review and update your firm's practices and policies on a regular basis to ensure continued compliance with the FCA's regulations and to address any new risks that may arise.
At MEMA, we provide expert guidance and support to CMC firms to ensure compliance with the FCA's Portfolio Strategy on Claims Management Companies. Our team conducts thorough assessments, provides recommendations for improvement, and assists in the implementation. Partner with us to ensure your firm is protecting customers from harm and remaining compliant with the latest FCA regulatory requirements.