Proposals for regulating claims management firms have been announced by the Financial Conduct Authority (FCA).
The plans, which include recommendations to force claims management firms to display their fees up front, also require them to signpost organisations which provide free advice such as the Financial Ombudsman Service.
The regulator states that if the proposals are approved, it will take over regulation from April 2019.
Prior to the change, the FCA also intends to require claims management firms to provide details of both their services and prices before the consumer signs the contract.
Transparency also extends to marketing material, pre-contract disclosure, and leads lists, with the regulator requiring firms to provide details of free alternatives, and removing the ability of firms to simply take lists of leads from third parties if they have not been legally obtained.
Chief Executive of the Financial Conduct Authority, Andrew Bailey said: “A well-functioning claims management sector can help to provide justice and redress to people who have suffered harm. But the market doesn’t always work as it should and poor conduct persists across the sector.”
