On 31 March 2021, the UK Financial Conduct Authority published a news story encouraging claims management companies (‘CMCs’) and high cost credit lenders (‘HCC lenders’) to work better together.
The FCA is aware of:
– some CMCs having presented a claim to a HCC lender where the customer had never taken out a loan with them;
– some HCC lenders suspending lending whilst the complaint is being investigated;
– some CMCs using ‘catch all’ letters of authority; and
– some HCC lenders being unwilling to share information efficiently.
The FCA has reminded CMCs that:
– they must not make or pursue a claim if they have reasonable grounds to suspect the claim does not have a good arguable base or is fraudulent, frivolous or vexatious;
– they should take “all reasonable steps to investigate the existence and merits of each element of a potential claim” before making or pursuing a claim; and
– their investigations should enable them to make representations when presenting a claim which: (i) substantiate the basis of the claim; (ii) relate to the nature of the claim and are specific to the claim; and (iii) are not false, misleading or an exaggeration.