Financial Conduct Authority taking over control of claims management regulation

RCUK is pleased to announce it has achieved the first stage of transition to the Financial Conduct Authority (“FCA”) authorisation by successfully being given a temporary licence to continue its business activities beyond the 31st March 2019.

It was back in June 2018 that the FCA first set out its proposals on how it intended to regulate claims management companies once they had transitioned from the Ministry of Justice (“MoJ”) Claims Management Regulator (“CMR”) on the 1st April 2019. Following the publication of their consulting document ‘Claims management: how we propose to regulate claims management companies’ a series of roadshows and feedback was sought from the industry. This resulted in a final policy statement ‘Claims management: how we will regulate claims management companies’ being issued in December 2018.

RCUK was invited to apply for a temporary licence which it has now done and RCUK’s full and final application will be completed between 1st June and the 31st July 2019.

RCUK welcome the change of regulation which means even more stringent adherence to good business practice and ethical trading. The FCA have stated there are three main areas of focus:

• Customers – The FCA want customers to be empowered and confident in choosing a value-for-money service which is appropriate for their needs.
• Claims Management Companies (“CMC’s”) – The FCA want CMC’s to help customers get redress in a way that complies with their rules and be authorised so that they meet a common set of standards.
• Regulatory – The FCA want to regulate in a way that prioritises high standards of conduct and improves public confidence in claims management services.

What is clear is that the FCA are bringing additional financial accountability for CMC’s which will also increase the barriers to entry into the different markets. These will apply to redundancy claims and the employment claims sector generally. Two important ones are:

• CMC’s will be required to hold a minimum level of prudential resources which will be either £10,000 or the CMC’s 12 month fixed overhead requirements.
• CMC’s holding client accounts need to hold £20,000 in eligible capital.

This means claims management companies offering redundancy claim services and wishing to be regulated by the FCA and operate client accounts must hold a minimum of £30,000 in trust in order to be compliant.

RCUK will continue to update you on all the implications of the new FCA regulation over the coming months.

If you would like to know more about the FCA regulation or understand more about how we work please contact Gary Addison at rcuk@redundancy-claims.co.uk or 01625 811 134.