On 1 April 2019, the Financial Conduct Authority (FCA) will become the regulator of claims management companies (CMCs) established or serving customers, in England, Wales and Scotland. At the same time the Financial Ombudsman Service (FOS) will become responsible for resolving disputes about CMCs.
On 5 June 2018, the FCA published a consultation paper, CP18/15, on how it proposed to regulate CMCs when the responsibility for regulating the sector is transferred to it. Among other things, the consultation paper set out the arrangements for a temporary permissions regime so that CMCs can continue trading from 1 April 2019 onwards, and for re-authorising and regulating them after that. The consultation paper explained that the temporary permission gateway would open between 1 January 2019 and 31 March 2019.
On 20 August 2018, the FCA published a further consultation paper, CP18/23, which explains how it proposes to set the fees that will recover its costs from firms, both under the temporary permissions regime and for regulation in the long term. The FCA is proposing to recover the periodic fees for 2019/20 when firms register for temporary permissions from 1 January 2019. Future fees proposals affecting CMCs and changes in the fee rates will be consulted on through the FCA's standard cycle of fees consultation, full details of which are given in paragraphs 1.9 and 1.10 of the consultation paper.
Chapter 2 of the consultation paper sets out proposals for the long term fees structure (authorisation fees, periodic fees, definition of turnover as the base for payment of fees) and the short term arrangements for temporary permissions. Chapter 3 of the consultation paper sets out the FCA's proposals for the FOS general levy. The FCA does not propose to extend Financial Services Compensation Scheme (FSCS) cover to consumers of CMCs at present, but may review the position in the future if there is evidence of significant consumer harm. CMCs will not be required to contribute to the costs of running the FSCS.
Comments are requested by 22 October 2018. The FCA will publish feedback in a policy statement in December 2018. It will make the rules, amended if necessary in the light of comments, at the December 2018 FCA Board Meeting. The rules will come into effect from 1 January 2019, so that firms can start applying for temporary permission.