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The Analysis News & Opinions
Regulator launches claims management fi rm fees cap
New restrictions have been introduced, which will apply to claims management companies (CMC) to prevent them from charging excessive fees to consumers owed compensation from fi nancial services fi rms. Under new Financial Conduct Authority (FCA) rules in force from today, the maximum consumers can be charged will depend on how much redress they are due. For example, if the redress amount is below
£1,500 consumers can only be charged a maximum of 30% of their claim, or £420, whichever
is lower. (See redress bands
below for full details and maximum charges). The changes are expected to save consumers £9.6m a year and thousands of pounds on some individual claims. The cap will apply to most claims where a consumer is awarded monetary redress from a fi nancial services fi rm, either directly from a fi rm, via the Financial Ombudsman Service (Ombudsman Service) or if a fi rm has gone out of business, from the Financial Services Compensation Scheme (FSCS). For other fi nancial services claims, the rules
require charges to be reasonable. The new rules do not apply to PPI claims
which are already subject to a 20% cap, set by Parliament.
The rules mean CMCs must also disclose
key information to consumers before entering a contract, such as giving more detail about how fees will be calculated and making sure they are aware of the free routes to redress available. For example, if consumers make a complaint or a compensation claim themselves to the Ombudsman Service or the FSCS they would keep all redress awarded. Sheldon
Mills, executive director of
consumers and competition at the FCA, said: “Our rules protect consumers from losing a signifi cant amount of their compensation in excessive fees, particularly when there are ways for them to make claims without incurring any fees.
“The changes are part of our ongoing
work to drive a fundamental shift in indus- try mindset so we can stop consumer harm before it happens, and to ensure more consistent standards of protection.”
Committee to investigate economic sanctions on Russia
The Treasury Committee was set to begin an inquiry on the eff ectiveness of Russian economic sanctions as CCRMagazine went to press. In the fi rst session of the ‘Russia: eff ective economic sanctions’ inquiry, the Committee will explore what makes sanctions eff ective, and what future sanctions are available. The committee will investigate how sanctions can be applied against
individuals, banks,
companies, and government reserves, with experts in sanctions, economics and payments policy.
8
MPs will explore the economic impact of economic sanctions on Russia and the UK, and will consider how the government can minimise potential increases to the cost of living as a result of sanctions. The role of the Economic Crime Bill in sanctioning Russian oligarchs, as well as the Government’s ability to enforce sanctions, will also be explored. Mel Stride, chair of the Treasury Committee, said: “With the world shocked and appalled by Russia’s illegal invasion of Ukraine, time is of the essence to impose meaningful sanctions
www.CCRMagazine.com
on the Russian state, businesses and oligarchs. As a Committee, we want to ensure that the economic sanctions already proposed bite hard and we will be looking to identify further eff ective measures that can be taken.”
March 2022
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