Martin Partington: Spotlight on the Justice System

Keeping the English Legal System under review

Posts Tagged ‘regulation of claims management companies

Regulation of Claims Management Companies: The Financial Guidance and Claims Bill 2017

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In March 2016, the Government announced that it planned to change the ways in which the regulation of Claims Management Companies is organised.

At present, this work is undertaken by a special unit within the Ministry of Justice. What is planned is that this work should be transferred to the Fincancial Conduct Authority – which has broad regulatory oversight of the financial services sector.

In the Financial Guidance and Claims Bill, which was published in June 2017, legislative proposals have been set out which – when the Bill is enacted – will achieve this objective. Clauses in the Bill will make amendments to the Financial Services and Market Act 2000 to enable the Financial Conduct Authority to regulate claims management company activity as a ‘regulated activity’ under the Act.

In addition, clauses in the Bill provide for the transfer of complaints-handling responsibility from the Legal Ombudsman to the Financial Ombudsman Service. This will allow the Financial Ombudsman Service to take over jurisdiction to investigate and determine consumer complaints about the service provided by the claims management companies.

The Financial Conduct Authority will also be given power to impose a cap on the fees that claims management companies can charge for their services.

These seem to me sensible reforms which should offer better protection to consumers who use Claims Management Companies and to protect companies against malpractice by those companies.

The Bill has started its progress through Parliament. I anticipated the measures will be enacted sometime in 2018, with implementation shortly thereafter.

The Bill can be viewed at

Recent annual reports on the work of the Claims Management Regulator can be found at





Written by lwtmp

August 26, 2017 at 11:07 am

Regulation of Claims Management Companies

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One of the documents published with papers relating to the March 2016 Budget statement was a report of an independent review of Claims Management Companies (CMCs). Unusually, CMCs are regulated by a dedicated Unit which operates within the Ministry of Justice, rather than by a body more independent of a government department.

The review offers three options for the way forward: 1, creating a wholly now external regulator; 2, leaving things within the Ministry of Justice, while building on the reform programme currently being developed by the Unit; or 3, transferring the function to the Financial Conduct Authority.

The review concluded that the first option would be unlikely to be approved by Government, as it would be too expensive and disruptive. The second option would be the least disruptive to the market; option 3 would permit a new, refreshed approach.

The Government has now announced that it will transfer this function to the FCA – but as this will require legislation to achieve, it is unlikely to take place before 2018.

Details of the review are at



Written by lwtmp

March 18, 2016 at 11:54 am

Legal Ombudsman – complaints about Claims Management Companies

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After some delay, the Legal Ombudsman acquired jurisdiction to deal with complaints against Claims Management Companies in January 2015.

On 5 November 2015, Simon Tunnicliffe,  the Legal Ombudsman’s Head of Claims Management Complaints, reported in an interview that they have had 9,000 enquiries about claims management companies  since they widened their remit to consider complaints about these companies, in addition to their previous remit. Many of the complaints concern the amount of money retained by CMCs, and not passed on to the original claimant, e.g. for personal injury.

Further information about the work of the Legal Ombudsman in relation to CMCs is available at

Written by lwtmp

November 5, 2015 at 12:16 pm

New financial penalties for claims management companies

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At the end of December 2014, the Government introduced a new scheme for the imposition of financial penalties on claims management companies (CMC) that fail to adhere to the regulations that control this sector of the legal services market. Made under provisions in the Financial Services (Banking Reform) Act 2013, from 29 December 2014, the imposition of a financial penalty becomes an additional available enforcement sanction for use against non-compliant authorised persons under the following circumstances:
• As a consequence of a failure to comply with the Conduct of Authorised Persons Rules
• As a consequence of a failure to comply with requirements regarding the provision of
information or documents to the Regulator
• As a consequence of a failure to comply with a requirement to take out a policy of
professional indemnity insurance
• As a result of the Regulator being obstructed in its execution of a warrant to enter and search
premises for the purposes of investigating a complaint about the activities of a regulated
CMC, or assessing the regulated CMC’s compliance with the conditions of its authorisation
• As a result of the Regulator being obstructed from attempting to take possession of, or copies
of written or electronic records found when executing a warrant to enter and search premises.

It should be noted that these penalties are not imposed by a court but by the regulator of CMCs. The guidance states:

“In practice under the CMR Unit’s revised Enforcement Policy, a financial penalty is likely to be
considered where:
– Breaches have continued despite previous compliance advice or warnings
– Detriment caused to consumers or third parties in general can be clearly monetised
– Any financial gain or loss avoided by the business can be monetised
– The business has sufficient financial means to pay a penalty
– No previous formal enforcement action has been imposed
– Action to vary, suspend or cancel the authorisation of a business would be disproportionate
under the circumstances
This list is non-exhaustive but sets out some relevant indicators that are likely to be considered when
deciding whether to initiate the penalty calculation process or move to consider the other formal
enforcement sanctions.”

Full details of the scheme are set out at

In addition it should be noted that from January 2015, the Legal Ombudsman will have power to deal with complaints about bad practice by CMCs.

Written by lwtmp

January 10, 2015 at 5:52 pm