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Redundancy Claims UK Response to Dear IP Issue 135 Article 111 Claims Management Companies- Regulated activities

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As regular readers of our articles will be aware we have long campaigned for clarity and guidance in terms of who can assist a director or employee to make a claim to the Redundancy Payments Service. RCUK has been in regular communication with both the Financial Conduct Authority and the Insolvency Service in the last 12 months and welcome the publication of Dear IP Article 111.

For your assistance we have summarised the guidance below.

Engaging in a regulated activity whilst neither authorised nor an exempt person is a criminal offence under section 23 of the Financial Services and Markets Act 2000 (FSMA).  

Assisting a client in relation to a claim to the Redundancy Payment Services is a regulated activity as set out in The Financial Services and Markets Act 2000 (Claims Management Activity) Order 2018 and the FCA Handbook.

Assisting includes

  • Lead generation, i.e., seeking out, referral and identification of claims
  • Providing advice
  • Carrying out Investigation
  • Providing representation

How to remain exempt from FCA regulation

Do not undertake any of the above regulated activities.

What can you do

Insolvency practitioners are not providing a regulated activity if they simply highlight the existence of the Redundancy Payments Service and recommend using the services of an authorised CMC, named or otherwise. 

To refer work to an authorized CMC and remain exempt you must meet the below requirements

IPs may also claim exemption from authorisation under 89V The Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 if the IP meets all the criteria below.

The IP (or other firms):

  • Carries on no other regulated claims management activity.
  • The activity is incidental to the IP’s business.
  • The details are only referred to authorised persons, legal practitioners, or a firm, organisation or body corporate that provides the service through legal practitioners.
  • Of the claims that the IP refers to such persons, the IP is paid, in money or money’s worth, for no more than 25 claims per calendar quarter: and
  • In obtaining and referring the details the IP has complied with the provisions of the Data Protection Act 2018(33), the Privacy and Electronic Communications (EC Directive) Regulations 2003(34), the General Data Protection Regulation (EU) of the European Parliament and of the Council 2016/679(35) and the Consumer Protection from Unfair Trading Regulations 2008(36).

We would also remind IPs (and other firms) that whilst Section 327(9) of FSMA does provide that member of a designated professional body can rely upon the exemption from needing FCA authorisation for some FCA services, Part XX states that this is not applicable when carrying out regulated claims management activities. Therefore, being a licensed IP or a chartered accountant are not grounds for exemption to provide regulated claims management services.

Similarly, Insolvency Practitioners and other bodies already authorised by the FCA for other regulated services, for example debt management, still require specific FCA authorisation to provide regulated claims management services.

RCUK carry out stringent tests and due diligence in relation to any IP that they work with on a stakeholder basis. We also have full compliance processes in place to ensure that both we and the IP operate in accordance with relevant data protection legislation, including the General Data Protection Regulation (GDPR) and the Privacy and Electronic Communications Regulations (PECR).  

If you would like any further advice or assistance as to how you can ensure that your business does not commit a criminal offence or you would like any information as to how RCUK may assist your business or your clients in the field of director redundancy claims, please call our Directors, Andrew Read or Gary Addison on 01625 462587 or email them at [email protected] or [email protected].

Further information on how to operate compliantly can also be found at https://www.redundancyclaim.co.uk/for-professionals/introducer-compliance-guidance.

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