The background of the FCA’s client money requirements in relation to claims management activities

On the 1^st April 2019, the FCA became the regulator of claims management companies (CMCs). CMCs undertaking regulated claims management activities now need to be authorised by the Financial Conduct Authority (FCA). As part of its regulation of CMCs, the FCA sets out rules for CMCs that receive or hold client money on behalf of their customers when providing claims management services continue in chapter 13 of the FCA’s Client Assets Sourcebook (CASS 13). For more information about FCA regulation of CMC more generally, see Practice Note: FCA regulation of claims management companies—essentials.

Prior to being authorised by the FCA, CMCs that held client money were subject to the Ministry of Justice’s Client Account Rules 2006. The CASS 13 rules cover the same areas; although is more prescriptive. There are also other requirements, including the appointment of a CASS senior manager.

The scope of CASS 13

CASS 13 applies to regulated CMCs that receive