By Nick Baxter
7th August 2017
 

The Claims Management Regulator [CMR] has celebrated its 10th anniversary with a publication titled, “Celebrating 10 years”. The document warranted the subtitle, “Protecting Consumers/Curbing Malpractice”.

Regulation under the FCA to come!

As it has already been announced that the regulation of claims management companies [CMCs] will move from the CMR to the Financial Conduct Authority [FCA] over the next two years, so the report succinctly catalogues and sets on the record the CMR’s own regulatory journey over the last 10 years. There is no doubt that there have been significant milestones and progress over the last decade and that the move to the FCA will reinforce the continuing move to a professional claims management company sector.

Protection from the ‘rogue CMCs’

In terms of eliminating rogues, the numbers speak for themselves; 2,022 CMCs audited, 39 tribunals undertaken, £2.8 million in fines levied, 1,387 licences cancelled, 478 warnings issued and 16 warrants executed to enter premises and seize evidence. There is little doubt the CMR has done a lot to protect consumers from the rogues that give legitimate and professional CMCs a bad name.

Trusting banks to deal with consumers fairly!

But there is a problem; the CMR can only influence one side of the redress process. The CMR has clearly been successful at curbing CMC malpractice, but consumers suffer malpractice by those responsible for the redress too. Consumer commentators such as Martin Lewis, moneysavingexpert.com, Which? and others regularly point out the barriers that are put in place by the institutions who are responsible for paying out the redress to wronged consumers. It is not surprising that Martin Lewis states on his website, The stats are plain. Flabbergastingly, in over half (54% in the last 12 months) of all cases where after the bank rejects a PPI reclaim people take it to the independent Ombudsman, the bank’s rejection is overturned. Until we can trust banks to deal with complaints fairly in the first instance, this move to protect their balance sheets should not happen. It is putting the protection of the financial industry ahead of consumers. Worse still, many banks make it outrageously hard for people to find out if they ever had PPI. In meetings with the head of the FCA, we pushed hard to ensure that was changed if it imposed this deadline. I can’t see anything has changed. Let’s hope it’ll do this behind the scenes.”

Future regulation of CMCs

But we move forward. Legislation is working its way through Parliament to pass the responsibility for the regulation of CMCs from the CMR to the FCA. For the first time, one regulator will be responsible for those who assist consumers with their complaints and those who receive them. In many ways, this can potentially benefit consumers as the regulator of financial institutions will now, through its active oversight of CMCs, see first-hand the barriers to legitimate claims and will be able to step in earlier than they are able to now. The PFCA will continue to ‘whistle blow’ and evidence inappropriate behaviour, but the evidence will now be more visible to the FCA should it choose to look.