The Financial Services Authority has given its clearest signal yet to the government it wants nothing to do with the regulation of claims management companies.
In what could be considered nothing less than a blunt refusal to deal with claims chasers, Clive Briault, managing director of retail markets at the FSA, told the All Party Parliamentary Group on Insurance and Financial Services on Wednesday, the City Watchdog felt it was not the right organisation to regulate the activities of CMCs.
He said: “I do not think we are best placed to regulate personal injury claims. There has to be a point at which we say we refuse to regulate in an area where we have not expertise.”
He also hinted by the time legislation was passed, to regulate the activities of CMCs, the majority of cases those firms would deal with would be personal injury claims, an area the regulator feels it has no expertise in, rather than in endowments.
On CMCs, Briault said: “[They are] not carrying out an activity which we currently regulate and the vast majority of these firms deal with personal injury claims. The majority of claims management cases are around personal injury and endowment claims should be a short term hump. In the future, personal injury claims will make up the majority of cases.”
And when asked which organisation he thought would be better placed to regulate the activities of CMCs, he suggested the Lord Chancellor’s Office would be in the best position to act as regulator, given the government had changed its original plan to put the Claims Standards Council in charge of claims chasers.
“I think possibly the Lord Chancellor’s Office because the way in which these firms operate would suggest that office would be best suited to the task,” Briault said.
The government is currently thought to be considering a number of alternative organisations for the job of regulator among which are the Office of Fair Trade, Trading Standards, the Lord Chancellor’s Office and the FSA, although a spokesperson for the Department for Constitutional Affairs indicated last summer the Legal Services Commission was favoured by the government to regulate CMCs.
Briault also told the Group the FSA believed as many as 40% of all endowment claims were now going through CMCs, and which charge policyholders anywhere between 25% and 40% of the compensation they received for their services, despite continuing efforts to promote the free Financial Ombudsman Service available.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Matthew West on 020 7484 9893 or email [email protected].IFAonline
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Speaking at PA360 North
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