0 £0.00
This item was added to your basket
Credit Strategy homepage
LinkedIn
Twitter
Intelligence, Insight and community for responsible professionals in credit

Dear visitor,
You are viewing 1 of your 1 free articles


We’ve invested in our content to provide more news, analysis, features, interviews and opinions across a wide range of Credit and Financial Services. Register now to access more of the trustworthy, insightful information that’s on offer.

Register now or Login

FCA proposes price cap for claims management companies

The Financial Conduct Authority (FCA) has proposed an introduction of a price cap on the fees claims management companies (CMCs) charge consumers.

Share on LinkedInShare on TwittereCard

According to the FCA, some consumers currently pay fees of more than 40% of the redress they receive. The proposed cap restricts this, and will mean CMCs won’t be able to charge more than 15-30%, depending on how much the consumer is due.  

 

This will see some consumers saving several thousand pounds on the fees they pay to CMCs. The cap will apply to all claims where a consumer is awarded monetary redress, apart from PPI claims which are already subject to a cap set by parliament. 

 

The regulator is also proposing that CMCs will be required to disclose key information, such as giving consumers more information about how the fees they pay will be calculated, with better signposting to the free alternative routes to redress that are available. This must be disclosed to consumers before they enter into a contract. 

 

Sheldon Mills, executive director of consumers and competition at the FCA, said: “We took over regulation on CMCs in April 2019, and have been proactively supervising the sector. Consumers can experience harm when they do not understand the nature of the service CMCs provide and where they are charged excessive fees. The proposals we have announced are designed to address this.” 

 

The consultation is open until 21 April 2021.

 

Credit Strategy’s analysis of complaints sent to the Financial Ombudsman Service shows that CMCs drove up complaints to alternative lenders throughout last year.

Share on LinkedInShare on TwittereCard
Add New Comment
You must be logged in to comment. Login or Register to access enhanced features of the website.

GET THE LATEST INDUSTRY NEWS STRAIGHT TO YOUR INBOX

READ NEXT

KPMG to sell its UK restructuring practice

KPMG to sell its UK restructuring practice

Budget 2021: Firms welcome war chest to tackle furlough fraud

Budget 2021: Firms welcome war chest to tackle furlough fraud

SMEs offered flexibility to extend bounce back loans to 10 years

SMEs offered flexibility to extend bounce back loans to 10 years

Upcoming events

Credit Strategy
LinkedIn page

Member of

Did you find our website useful?

Thank you for your input

Thank you for your feedback

creditstrategy.co.uk – an online news and information service for the UK’s commercial and consumer credit industry. creditstrategy.co.uk is published by Shard Financial Media Limited, registered in England & Wales as 5481132, Axe & Bottle Court, 70 Newcomen St, London, SE1 1YT. All rights reserved. Credit Strategy is committed to diversity in the workplace. @ Copyright Shard Media Group