The Financial Conduct Authority (FCA) has begun regulating the insurance claims management industry from 1 April. All claims management companies (CMCs) in England, Wales and Scotland — obviously including those specialising in motorcycle claims — will have to demonstrate that they meet and maintain minimum standards set by the regulator.
CMCs now need authorisation from the FCA to trade. More than 900 existing companies have already registered for temporary permission to continue operating while they jump through various compliance hurdles.
The rules that apply to them under this new FCA regulatory regime were published last December. Requirements include:
- Due diligence on lead generation and rules to prevent firms encouraging customers to make fraudulent, frivolous or vexatious claims or claims which have no good basis.
- Providing clear, upfront information to customers about the fees they charge and the services they will provide.
- Giving customers a summary document about the services they will provide before the customer signs a contract.
- Telling customers about free alternatives such as the Financial Ombudsman Service or the Financial Services Compensation Scheme, including in advertising.
- Recording and retaining customer telephone calls for a year after their final contact with a customer, to reduce the chances of high pressure sales techniques and support robust resolution of customer complaints.
The FCA has a number of statutory big sticks available to thrash CMCs which fail to comply, such as formally requiring them to change their business practices, imposing financial penalties and simply refusing authorisation in the case of serious misconduct.