Dear IP Issue 111 – RCUK Response

RCUK have been asked by a number of IPs for a response to the Insolvency Services latest Dear IP publication No 111.

RCUK are pleased to note that the newsletter acknowledges the role that compliant and regulated CMCs have to play in supporting directors in making redundancy claims and that the majority of claims are paid out without any issues.  However, there are two very important points that that need clarification:

• The Dear IP publication states that, “An insolvency practitioner should only engage CMCs who fully comply with requirements of the CMR for assistance in performing their duties.” The reference should now be to the FCA and not CMR. The CMR ceased operating as the Regulator for this industry when responsibility was passed to the Financial Conduct Authority (“FCA”) on 1 April 2019. Any claims management business who wished to maintain their authority to provide regulated claims management services at this date, applied for a temporary permission and were subsequently required to undertake a rigorous application process with the FCA. This process included a detailed analysis of the company’s’ business model and the competency, integrity, and solvency of the business and the individuals running the business. I am pleased to advise that the FCA endorsed Redundancy Claims UK’s application and described their applications as “exemplary”.
• In regards to the statement “The RPS also takes the view that if anyone needs advice on completion of any claim form, they can get such help, without incurring any expense, from the RPS’s gov.uk pages, or from the insolvency practitioner.”.  Whilst it is perfectly fit and proper that an IP notifies the  director that, subject to eligibility he or she can make a claim to the Redundancy Payments Service,  they should not be providing any advice on the eligibility or financial elements of the claim (other than information that is already detailed on the government website) or assisting the employee with the submission of their claim. IPs that do this will be committing a criminal act by breaching the Financial Guidance and Claims Act 2018.

Section 419A of the Financial Guidance and Claims Act 2018 states:

(1) In this Act “claims management services” means advice or other services in relation to the making of a claim.

(2) In subsection 1 “other services” includes —

(a) financial services or assistance,

(b) legal representation,

(c) referring or introducing one person to another, and

(d) making inquiries.

What the Dear IP publication No 111 did not say

The article confirms that IPs can refer directors to a CMC but it does not go on to say how an IP can do this and still remain exempt from FCA regulation.

IP’s remaining exempt introducers and understanding what they can and can’t do in respect of director and employee redundancy claims is extremely important if IP’s are going to avoid significant risks to their regulatory licenses.

It is all too easy to inadvertently breach the exempt introducer status and with little or no guidance being issued from the regulators and trade bodies RCUK have published on our website a free downloadable guide for IP’s called the ‘Compliance Guidance for Insolvency Practitioners v1.6 Includes FCA Regulatory Update’.

This guide covers how by working with a authorised FCA regulated company like RCUK you can remain exempt and completely de-risk breaching your exempt introducer status.

The ‘Compliance Guidance for Insolvency Practitioners v1.6 Includes FCA Regulatory Update’ can be downloaded by clicking on the following link to the RCUK website.

https://www.redundancyclaim.co.uk/for-professionals/ip-exempt-introducer-compliance-guide-fca-updated

The initial guide was written whilst operating under the regulatory framework of the Claims Management Regulator and has since been updated to reflect the current FCA regulatory regime. RCUK can confirm that the provisions have been adopted into the Financial Services and Markets Act 2000 (Claims Management Activity) Order 2018. The only minor change is now an additional specific requirement within the order that the introducer complies with the provisions of the Data Protection Act 2018, the Privacy and Electronic Communications (EC Directive) Regulations 2003, the General Data Protection Regulation (EU) of the European Parliament and of the Council 2016/679 and the Consumer Protection from Unfair Trading Regulations 2008.

For completeness and your own records the relevant section of the Act are confirmed below:

The Financial Services and Markets Act 2000 (Claims Management Activity) Order 2018:

89V. Certain providers of referrals

(1) There is excluded from article 89G the activity of referring details of a potential claim or potential claimant to another person if:

(a) the person who refers those details (“the introducer”) carries on no other regulated claims management activity;

(b) the activity is incidental to the introducer’s main business;

(c) the details are only referred to authorised persons, legal practitioners, or a firm, organisation or body corporate that provides the service through legal practitioners;

(d) of the claims that the introducer refers to such persons, that introducer is paid, in money or money’s worth, for no more than 25 claims per calendar quarter; and

(e) the introducer, in obtaining and referring those details, has complied with the provisions of the Data Protection Act 2018, the Privacy and Electronic Communications (EC Directive) Regulations 2003, the General Data Protection Regulation (EU) of the European Parliament and of the Council 2016/679 and the Consumer Protection from Unfair Trading Regulations 200).

If you would like to know more about how RCUK can assist you to operate without breaching the FCA regulatory regime and to maintain your exempt introducer status please contact Gary Addison at [email protected] or 01625 462587.