This clearly signals an intention to progress the transfer of claims management regulation to the FCA as early as possible. Albeit there are legislative requirements it has to pass through, the Bill could become primary law reasonably quickly and see the transfer within the next twelve months or so.
Whilst the transfer has been known for some time, following the publication of the Carol Brady Report in March 2016, it may come as something of a surprise that it could occur as early as 2018.
The new law, as currently drafted, not only provides for the transfer of regulation to the FCA, but it also creates rather wide-sweeping powers in terms of the fees that claims management companies may charge a customer when dealing with financial products or services, most importantly personal protection insurance (PPI). The FCA will have a mandatory requirement to make rules concerning fees and has the power to impose a ‘fee cap’ to a specified amount. This is something which has also been subject to formal consultation by the current regulator, the Claims Management Regulator.
For those claims companies looking to continue under the FCA, they will need to consider life with a new regulator. The FCA takes a very robust view of regulation and has a considerable amount of very detailed requirements within its Handbook, not least of all its Code of Conduct and Threshold Conditions.
Firms therefore need to start thinking now about how they will comply under this new regime. It is certainly not an area of compliance that they should leave until the last minute.
Solicitor Andrew Swan, Head of Regulation at law firm Short Richardson and Forth stated: “I was rather surprised to see the new Bill go so quickly before Parliament, but it clearly spells out an intention to get things moving. There has not been a great deal said since the Brady Report was published, but the transfer to the FCA is now looming. Whilst I would expect firms to enjoy ‘grandfather rights’ by way of interim permission, they should be looking closely at their systems and processes to ensure they are FCA fit and ready.”
The FG&C Bill and Guidance can be found here: http://services.parliament.uk/bills/2017-19/financialguidanceandclaims/documents.html
Andrew Swan can be contacted by email at: as@srflegal.co.uk or telephone: 0191 232 0283