The Ministry of Justice (MoJ) has published a consultation paper proposing to place restrictions on the level of fees that regulated Claims Management Companies (CMCs) can charge consumers in the financial products and services claims sector.
The MoJ is requesting views and further evidence in relation to its proposals of:
- Capping the maximum completion fee to 15% (inc VAT) for bulk claims with a single lender and capping the overall charge to £300 for claims worth more than £2,000.
- Introducing a maximum cancellation fee of £300 for bulk claims, when a consumer cancels their contract with the CMC after the 14 day cooling off period.
- Banning CMCs from receiving or making any financial payment for referring or introducing a consumer to a third party in relation to a PPI or PBA claim.
- Banning any fees where no relationship is found between the consumer and a lender.
- Banning all upfront fees for all financial claims, where CMCs ask to be paid before any work is carried out.
- Capping the maximum completion fee to 25% (inc VAT) of the final amount of compensation awarded in all other types of financial cases.
It is proposed that these changes would come into effect by way of amending the Conduct of Authorised Persons Rules 2014. Responses are sought by 11 April 2016.