With the Ministry of Justice (MoJ) proposing new rules on the regulation of these firms, AIFA said one of the main problems at the moment is lack of resources.
Chris Hannant, the trade body’s policy director (pictured) said: “In the interests of consumer protection, we must ensure that sufficient resources and expertise is applied in this area.
“This means transferring regulation of CMCs to the new regulator, the Financial Conduct Authority.
“Failing that, the Ministry of Justice must be more proactive in monitoring and enforcing claims management companies’ compliance with the rules.”
Hannant also welcomed the MoJ’s plan to ban CMCs offering any financial rewards or similar benefits as an inducement to make a claim.
The MoJ’s consultation closed on 3 October, with other key proposed amendments to existing rules, including:
- CMCs to only be allowed to agree contracts in writing with their clients, before any fees can be taken
- CMCs to be required to inform their clients of any suspension or variation to the business’ authorisation once in effect
- CMCs to only be allowed to refer to their regulatory status as being regulated by the claims management regulator – rather than the MoJ which till now could be misconstrued as MoJ endorsement.
