Regulated activities relating to claims management services

The following Financial Services practice note provides comprehensive and up to date legal information covering:

  • Regulated activities relating to claims management services
  • Background to the FCA regulation of claims management activities
  • Regulated claims management activities
  • Seeking out, referrals and identification of claims or potential claims
  • Advice, investigation or representation activities
  • Exclusions applicable to claims management activities
  • Exemptions under FSMA 2000, and Part XX
  • The appointed representative exemption

Regulated activities relating to claims management services

Background to the FCA regulation of claims management activities

The Claims Management Regulation Unit (CMRU) was established within the Ministry of Justice (MoJ) in April 2007 to directly regulate claims management companies (CMCs). Since then, the government has become increasingly concerned about misconduct in the claims management sector. In 2015 it commissioned the independent Brady Review to examine the nature and extent of the problems in the market and make recommendations to improve the way it was regulated.

The final Brady Report made a number of recommendations to enhance the authorisation, supervisory and enforcement processes for the regulation of CMCs. The Report found that, in principle, the most suitable option would appear to be a new, standalone independent regulator focused solely on CMC regulation. However, given the government’s drive to reduce the number of public and arms-length bodies, and the fact that establishing an entirely new organisation would likely be more expensive than other options, the Report noted that, of the remaining options, strengthening the existing MoJ-based regulator and passing responsibility to the Financial Conduct Authority (FCA) were the most credible.

The decision was taken to transfer responsibility for regulating CMCs to the FCA and The Financial Guidance and Claims Act 2018 (FGCA 2018) was passed on 10 May 2018 to transfer the regulation of CMCs from the CMRU to the

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