The consumer duty has rules about consumer understanding under which firms must ensure that communications are likely to be understood by the consumers they are intended for.
Also that these communications equip consumers to make decisions that are effective, timely and properly informed.
Firms must also ensure that their products and services provide fair value with a reasonable relationship between the price consumers pay and the benefit they receive.
Where fees for the unregulated claims exceed those charged for the regulated claims services, the FCA said it strongly urges CMCs to keep in mind the spirit of the consumer duty, and whether the services they are providing represent fair value for the consumer.
This latest update follows on from the two year strategy set out by the FCA on CMCs.
In the letter last January, the FCA said it had seen some improvements but noted that risks of harm remain while new risks have emerged.
Since taking control of CMC regulation in 2019 the FCA has implemented a number of broad changes to how the sector is regulated, focusing on fees and instances of phoenixing.
In 2021, the FCA announced proposals to ban CMCs from managing FSCS claims where they have a relevant connection to the claim in a bid to halt cases of phoenixing.
The regulator also confirmed in 2021 that it would go ahead with a proposed cap on CMC fees come March 2022 in an effort to curb “excessive charging”.
More recently, in June 2022, the FCA pledged to eradicate phoenixing within two years.
At the time, advisers told FTAdviser that a crackdown was a nice idea but “wouldn’t happen”.
sonia.rach@ft.com
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