How Is The FCA Planning To Improve Standards In Claims Management?

Sep 28th '18

The Financial Conduct Authority (FCA) has launched a new consultation on the rules it will apply to claims management firms when it starts regulating them in 2019.


We summarise the proposed new rules and outline the consultation process here.


What is happening to claims management regulation?

From 1 April 2019, the FCA will regulate claims management companies (CMCs) in the UK, including those in Scotland, where firms are currently unregulated. In the rest of the UK, the industry is currently governed by the Claims Management Regulator, part of the Ministry of Justice.


SM&CR to apply to claims management companies

This week the regulator issued a consultation on applying the Senior Managers and Certification Regime (SM&CR) to CMCs.


The SM&CR will apply to authorised CMCs from December 2019. The FCA is encouraging claims firms to read the consultation paper for more details and specific information on when the SM&CR may apply to them and what action they will need to take.


What is the Senior Managers and Certification Regime?

The new regime aims to ‘reduce harm to consumers and strengthen market integrity by making individuals more accountable for their conduct and competence’.


Two key ways it hopes to achieve this are by:


  • encouraging a culture of staff at all levels taking personal responsibility for their actions.
  • making sure firms and staff clearly understand and can demonstrate where responsibility lies.


All firms must follow five conduct rules set out by the SM&CR. Senior managers also need to follow four additional rules.


How can you respond to the consultation?

The consultation is open until 6 December. You can respond by completing the online form, emailing your responses to or writing to Governance & Professionalism Policy, Financial Conduct Authority, 12 Endeavour Square London E20 1JN.


How can you prepare for FCA regulation and the SM&CR?

Launching this week’s consultation, the FCA said that:


Firms’ culture and governance is a continuing priority for us. The aim of the SM&CR is to reduce harm to consumers and help strengthen the integrity of the market by making individuals more accountable for their conduct. Nearly all employees of CMCs will have to abide by Conduct Rules and some senior managers will have to be approved by us.’


Claims firms preparing for regulation can get a step ahead by putting in place governance-oriented cultures, where compliance is an in-built part of the business.


You can also subscribe to the FCA’s email updates to receive details of the CMC-focused events the regulator is considering holding in the autumn; you can sign up online if you’re interested in attending.


Look at your communications – familiarise yourself with the FCA’s rules on Treating Customers Fairly and make sure your marketing and customer communications meet their requirements around being ‘fair, clear and not misleading’.


If you are new to FCA regulation, it’s worth reading up on what constitutes a financial promotion.


Embedding a compliance culture across your business

Adapting to FCA regulation can seem daunting – but if you work in claims management, there are steps you can take to prepare your firm.


How can we help!

At LS Consultancy, we offer a complete solution with a range of cost effective, regulatory compliance and marketing products and solutions that are uniquely suited to supporting firms.


Explore our full range today.