On 26 October 2020, the UK Financial Conduct Authority published a ‘Dear CEO’ letter to claims management companies. This states that the FCA has “identified, and continues to identify, issues” including:
– misleading, unclear and unfair advertising;
– poor disclosure of pre-contractual information about fees and/or the availability of free alternatives;
– unclear fee structures (including the fact that “a CMC’s fee will significantly reduce the amount of redress they might otherwise receive“;
– poor service standards (including advice);
– failing to undertake sufficient checks and collect relevant information before presenting claims;
– certain CMCs having been established by, or having close associations with, individuals at previous firms involved in misconduct (including mis-selling of financial products); and
– some CMCs have been looking to use existing data to recycle and re-market claims, leading to nuisance calls.
The FCA concludes that “many CMCs have demonstrated a poor understanding of, and sometimes attitude to, their regulatory obligations“.