FCA policy statement PS 22/6 on Claims Management Companies

Written by Thistle Initiatives - Compliance consultancy | Jun 8, 2022 11:00:00 PM

What has happened?

In June 2022, the FCA issued its Policy Statement PS 22/6 in relation to claims management companies (CMCs). The PS confirms certain new rules for CMCs that will come into force on 7 July 2022 and it applies to CMCs and their appointed representatives that deal with claims made to the Financial Services Compensation Scheme. This includes firms carrying on lead generation activity (for new and existing client agreements) as well as firms investigating and advising on claims and those representing consumers making claims (for new client agreements only).

What are the key points of the policy statement?

The rules aim to stop CMCs from managing FSCS claims with which they have a ‘relevant connection’, which can be direct or indirect, and they will also require CMCs to notify the FCA of ‘relevant connections’ they have and to attest annually as to the accuracy of their notification, which will be due within 60 days of gaining the relevant CMC permission.

The FCA defines a relevant connection as:

An employee, controller or member of the governing body of a CMC who was involved in or had responsibility for financial services activity that is the subject of a claim or potential claims,
A controller or member of the CMC’s governing body who is related to the person who was involved in or had responsibility for financial services activity that is the subject of a claim or potential claims, or
The CMC or a member of its governing body who has transferred a financial benefit to a person who was involved in or had responsibility for managing financial services activity that is the subject of a claim or potential claims.

The FCA estimates that 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, and PS 22/6 is intended to reduce this number of claims to zero within two years.

How can we help you?

If you’d like to know more about how we can help you with your claims management arrangements, or any other regulatory compliance issues, our specialist team is here to help.

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