The Financial Conduct Authority (FCA) will prohibit claims management companies (CMCs) from acting in Financial Services Compensation Scheme (FSCS) cases where the CMCs have "relevant connections" to the claims, according to the regulator’s latest policy statement.
According to the regulator's latest estimates, at least 220 FSCS claims per year involve phoenixing connections between the firms submitting the claims and the former financial services firms they are made against. The FCA aims to reduce that number to zero for CMCs it regulates, within two years of the rules coming into force, it said. ‘CMC phoenixing' happens when people from FS firms that have gone bust later start working for CMCs involved in bringing compensation and FSCS claims against their former employers. The policy statement, published on 7 June, also requires CMCs to te...
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