ME Group Holdings (ME Group) has welcomed the new regulatory regime (i) for claims management companies, which takes effect in April 2019.
Rob Cooper, CEO of ME Group, said the new regime will make a significant difference to the overall reputation of the sector, arguing that the regulation of CMCs by the FCA will drive up standards and create an industry that can deliver quality outcomes for UK consumers.
He said: “With increased regulation and greater supervision, CMCs that are compliant and have the right customer-focused ethos can be a force for good, fighting the corner of hundreds of thousands of consumers who’ve been badly affected by mis-selling.
New LegalTech, such as the ME Group’s proprietary technology that enables fast and efficient dispute resolution for complex legal cases, can deliver positive outcomes for all stakeholders by reducing costs and ensuring only legitimate disputes are presented to financial service providers, the Financial Ombudsman Scheme (FOS) and the Financial Services Compensation Scheme (FSCS).
Mr Cooper said: “The winners in the new FCA regime should be consumers, and particularly vulnerable consumers, who so often in the past have suffered detriment as a result of both poor quality financial services and rogue claims management companies.”
He explained that CMCs will be subject to similar conduct of business principles that apply to other parts of the financial sector and there will be tighter controls on markets, customer contact, disclosure and solvency rules. He said that variable fee rates based on turnover are a sensible way to pay for regulation, but warned that some CMCs may decide to go underground, particularly if they are merely marketing firms providing no material service that is of value to the end customer. The Financial Ombudsman Service (FOS) general levy on CMCs and individual case fees will be announced in March 2019.
Mr Cooper said he expected 2019 to herald a new wave of mis-selling claims, in mortgages. SIPPs, and other financial products: “On mortgages alone, over 100,000 consumers have contacted us requesting help and a large number of the mortgages we have assessed have been mis-sold, or have been overcharged by their lender in respect of mortgage interest.”
According to Mr Cooper, actions by lenders after the financial crash have meant thousands of borrowers have become mortgage prisoners. They have also been overcharged, or in the worst cases, lost their homes.
He said that FCA regulation of claims management firms should give consumers greater confidence in using reputable service providers, where they choose to engage a representative to act on their behalf.
He said: “Of course in many instances consumers may choose to complain directly to the financial services provider, or go directly to the Financial Ombudsman Scheme or Financial Services Compensation Scheme. The important point is that effective regulation creates a safer market place from which consumers can choose claims management service providers if they want to.”
(i) Regulation of Clams Management Companies by the FCA will come into effect on 1 April 2019. For more information please visit: https://www.fca.org.uk/firms/claims-management-regulation
About the ME Group
The ME Group is a LegalTech provider of litigation funding, insurance and legal representation for consumers facing complex legal problems. Using our proprietary technology, we provide fast and efficient dispute resolution that is revolutionising the legal services market for the benefit of all stakeholders.
Located in Cheshire’s prestigious Alderley Park, the ME Group has rapidly grown from its inception in 2017 to become a market leader in its sector championing access to justice for consumers.
The ME Group mission is to improve the quality, and reduce the cost, of dispute resolution for all parties through the use of LegalTech
For more information please contact: Ben Welsh, 07568 382040.