The regulators said that third party complaints fell under the FCA rules, requiring firms to handle the complaints fairly, consistently and promptly.
They said they were monitoring claims for signs of ‘frivolous or vexatious’ activity, while the CMR is cracking down on poor behaviour among CMCs and has already tightened its conduct rules for firms.
However, in practice vexatious claims are relatively rare, they claimed.
Advisers have previously criticised the Ministry of Justice (MoJ), which runs the CMR, for failing to protect firms from invalid mis-selling cases leveled by claims management companies (CMCs).
The regulators’ statement said: “Your investigation of the complaint, and the outcome of the complaint for the consumer, should be exactly the same regardless of whether the consumer uses a third party representative or not.
“A complaint may be generated because a CMC has brought a particular issue to a consumer’s attention. This does not mean that the complaint is any less valid than any complaint that has been brought directly by a consumer.
“You must assess each complaint on its merits, regardless of the process by which it was initiated.”
The regulators added that firms should report unfair claims to the CMR. “This will help the CMR to prioritise and target enforcement work to tackle breaches of its conduct rules, in particular where the services provided by a CMC do not meet the needs of the consumer, causing consumer detriment.”
The guidance also warned that firms were not allowed to claw back the cost associated with CMC-brought claims as consumers had the right to complain free of charge, whether or not they used a third party representative.
The regulators said that standardised letters should be treated in the same way as other complaints.
“Even if you receive a standardised complaint, it does not alter the fact that the consumer has expressed some form of dissatisfaction about the product or service provided,” the statement said.
However, the regulators reminded firms that its complaints rules only applied when there was an “expression of dissatisfaction” about a product or service, not when a CMC merely asks for information about a client.
It also warned of potential breaches of the Data Protection Act when handling personal information. However the CMC may issue a Subject Access Request to ask for client data.
>Here is a story of how one adviser is tackling bogus claims <
Things to look out for when interacting with a CMC:
Letters of Authority
A CMC should ensure it has a valid letter explaining it is
authorised to represent a client and the exact nature of the authority granted to it.
Obtaining information about the customer’s details
When receiving a Data Subject Access request for client information, financial services firms should ensure they comply with their obligations under the Data Protection Act in a timely and reasonable manner, (but this need not start the complaints process).
Complaints submissions and complaint handling
Firms must investigate complaints received competently, diligently and impartially, obtaining additional information as necessary. However, CMCs should ensure that they provide firms with as much information as possible to begin with.
