On 5th of January, the Financial Conduct Authority (“FCA”) published their most recent portfolio strategy letter to Claims Management Companies (“CMCs”). The FCA’s portfolio letters set out the main risks of harm that CMCs pose to consumers and markets and provide insight into how the FCA propose to monitor and intervene to avoid consumer detriment.
The key concerns highlighted included;
- Sourcing of customer data- firms do not always carry out appropriate checks when purchasing customer data.
- ‘Poor attitude’ to regulation- firms displaying a ‘poor attitudes’ to regulatory obligations where firms do not take a proactive approach.
- Financial promotions- firms using misleading, unclear and unfair advertising.
- Potential claims- firms failing to investigate the existence and merits of each element of potential claims.
- ‘Halo effect’- firms using FCA authorisation to legitimise their services.
This latest portfolio letter aligns itself with the holistic approach which the FCA take towards regulation and provides a clear indication of what the FCA expect from CMCs under the Consumer Duty which comes into force in July 2023.
This portfolio letter follows on from the last portfolio letter to CMCs in October 2020. You can read the portfolio letter in full here.