The FCA have urged High Cost Lenders (“HCL”) and Claims Management Companies (“CMC”) to work together to seek better and more efficient outcomes for consumers.
The regulator expressed their expectation that CMCs and HCLs work together to resolve disputes and agree streamlined claims handling processes.
Examples of some of the issues causing tension between CMCs and HCLs are:
- Some HCLs have identified instances of a CMC having presented a claim, but the HCL insists that the customer had never taken out a loan with them.
- HCLs may suspend lending to clients who bring complaints while the claim is being investigated, potentially denying those customers an important source of credit. Faced with this, some customers may withdraw the complaint, possibly resulting in the CMC charging the customer a cancellation fee.
- Some HCLs have expressed concern that CMCs may be using ‘catch all’ letters of authority (“LoA”) to pursue claims against more than one HCL.
- Some CMCs have expressed concerns that HCLs’ checking of LoAs may be excessive and deliberately being used to hinder a customer’s ability to progress their complaint using a CMC.
- Some HCLs appear to be unwilling to share information efficiently – for example by agreeing streamlined claims processes – with CMCs who are exploring potential claims.
The FCA stated that where they have investigated complaints from HCL firms about CMCs, they have found that, in most cases, the customer has legitimate grounds to complain and is being represented by a CMC with a valid LoA.
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