Claims Management Regulation consultation: cutting the costs for consumers – financial claims

Overview

This consultation paper sets out proposals to place restrictions on the level of fees that regulated Claims Management Companies (CMCs) can charge consumers in the financial products and services claims sector.

The consultation seeks views and further evidence in relation to the proposals and is aimed at all regulated CMCs, trade bodies and anybody with an interest in claims management matters in England and Wales.

Proposals

We are seeking views and further evidence in relation to our proposals to;

- Cap the maximum completion fee to 15% (Inc. VAT) for bulk claims (such as mis-sold payment protection insurance claims) with a single lender and cap the overall charge for claims worth more than £2,000 in total to £300.

- Introduce a maximum ‘cancellation’ fee of £300 for bulk claims when a consumer cancels their contract with a claims management company after the initial 14 day ‘cooling off’ period.

- Ban CMCs from receiving or making any financial payment for referring or introducing a consumer to a third party in relation to a PPI or PBA claim

- Ban any fees where no relationship is found between a consumer and a lender.

- Ban all upfront fees for all financial claims, where CMCs ask to be paid before any work is carried out.

- Cap the maximum completion fee to 25% (Inc. VAT) of the final amount of compensation awarded in all other types of financial case.

The proposed changes would be implemented via changes to the Conduct of Authorised Persons Rules 2014.