What Are the New FCA PPI Claim Company Regulations?
The mis-sold Payment Protection Insurance (PPI) scandal set the stage for millions of consumers to claim PPI refunds. This, in turn, led to the Financial Conduct Authority (FCA) addressing its regulations on PPI claims.
The role of the Financial Conduct Authority (FCA) is to supervise the conduct of financial firms, such as claims management and PPI claim companies. It ensures that firms are regulated, adhere to rules and maintain high standards of operation. If regulated firms fail to treat customers fairly or behave in a way that risks the financial stability of the financial services marketplace, the FCA has powers to intervene. In other words, the FCA acts as a “consumer champion” to ensure that the public is treated fairly.
Over the course of the PPI scandal, the FCA has enabled customers to claim for mis-sold PPI for a variety of reasons. Many customers were simply not told by banks that they were being charged for PPI. Others were charged high levels of commission — over 50% — on their PPI sale. Such an instance led to the FCA introducing new guidance on handling PPI claims in the light of a Supreme Court ruling to overturn a lender’s decision to not offer a PPI refund. In this case — Plevin v Paragon Personal Finance — the lender failed to disclose the high amount of commission that was made from the complainant’s PPI sale. This set a precedent for thousands of consumers to make a claim and the FCA reacted accordingly to advise claims management companies. As the tide of PPI claims continues to turn, new rules and regulations are being enforced, but what do these mean?
2019 FCA PPI Claim Company Regulations
As of 1 April 2019, the FCA will become the new regulator of Claims Management Companies (CMCs) that serve consumers in England, Wales and Scotland. This means all new CMCs will need to be authorised by the FCA and comply with set rules, called “Threshold Conditions”.
CMCs who want to continue with their regulated claims management activities will also need to be authorised by the FCA. This includes sole traders, partnerships and incorporated companies. CMCs that are currently regulated by the Claims Management Regulator, the current authorisation body, will not be automatically granted authorisation by the FCA. Therefore, these businesses will be required to complete a registration form applying for authorisation. All fees must be sent by 31st March 2019.
General FCA Rules Regarding PPI Claims Companies
In November 2017, the government agreed on new regulations for PPI claims companies. Consumers need to be aware of these regulations, especially if they are using the services of a PPI claims company.
These regulations aim to provide customers with a fair service when using PPI claims companies. While the Claims Management Regulator will continue to regulate firms until the FCA takes over in 2019, an interim fee cap has been placed — as of July 2018 — on charges of PPI claims companies. This states that customers cannot be charged over 20% + VAT on their PPI claim. In addition to this fee cap, the FCA PPI claim company regulations state:
No fees should be charged to a client prior to the conclusion of a PPI claim
Claims Management Companies (CMCs) will be required to ensure all charges are reasonable and provide clients with an itemised bill reflecting the work undertaken
A business, unless subjected to regulation 8 of the Damages-Based Agreements Regulations 2013, must permit the client to cancel the contract at any time.
All PPI claims companies must adhere to these FCA PPI regulations. Failure to comply with these rules will result in penalties.
Use a Regulated PPI Claims Company
It is vital to use a regulated PPI claims company to ensure that your case is handled efficiently and with expertise. While the FCA PPI regulations now state that PPI claims companies cannot charge more than 20 + VAT on successful claims, reputable companies have been charging significantly less than this long before the interim fee cap. If you were mis-sold PPI, a claims company can make a claim on your behalf. When looking for a PPI claims company, it is vital that you choose one that has integrity, pays due regard to customers and communicates effectively. Evidence of these principles means you can rest assured that your PPI company of choice is reputable.
Are you looking for a regulated PPI claims company to handle your claim? Logican works with the best PPI claims companies to provide specialised software that streamlines the claims process. Make your claim today to avoid missing out on your refund.