FCA looks to cap fees charged by claims management companies

The Financial Conduct Authority has published plans to restrict the fees charged by claims management companies to 15% to 30% of the redress they receive.

This is down from the 40% or more charged by some. The FCA said the cap would save consumers £9.6m annually.

As part of the proposals (CP21/1), CMCs will have to give consumers more information about how the fees they pay will be calculated and better signposting to the free redress services available.

The cap will apply to all claims where a consumer is awarded monetary redress, apart from PPI claims which are already subject to a 20% cap set by Parliament.

Sheldon Mills, executive director of consumers and competition at the FCA, said: “We took over regulation of CMCs in April 2019, and have since been proactively supervising the sector.

“When working well, CMCs can provide useful services for consumers. However, consumers can experience harm when they do not understand the nature of the service CMCs provide and where they are charged excessive fees. The proposals we have announced today are designed to address this.

“We estimate that the proposed cap on fees could save consumers around £9.6m a year.”

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