ME Group has welcomed the FCA’s latest proposals to clamp down on scrupulous firms seeking to unfairly limit their liabilities at the expense of customers.
The financial watchdog says it has seen a rise in the number of firms developing plans such as ‘Scheme of Arrangements’ to manage their redress damages.
In guidance published this week, the FCA have made clear to firms that they should provide the best possible outcome for customers, which includes the maximum amount of funding to meet compensation claims.
Rob Cooper, CEO of ME Group, a firm championing access to justice through litigation funding and LegalTech, is backing the FCA’s proposals.
He said: ‘In recent months we’ve seen examples of firms who have caused widespread detriment to their customers, then sought to limit the damages that they pay, but gone on to seek further profits to reward their management teams and shareholders.
‘This undermines the standards set by the FCA by enabling firms to evade the consequences of poor behaviour and reduces consumer confidence in the financial services market.
‘If adopted, this guidance will make clear to firms, that there are no get out of jail cards for treating customers unfairly. If they fail their customers, then they will have to properly remediate them or face insolvency.’
The FCA will also use its regulatory powers, including enforcement actions for misconduct by firms or their senior managers, when appropriate.
In a statement on the FCA website, Sarah Pritchard, Executive Director of Markets at the FCA, said:
‘Under existing company and insolvency law, firms have options to limit their liabilities. When making use of these, they still have a responsibility to treat their customers fairly. We will take action against firms that don’t meet this obligation.
‘The guidance we are consulting on should help firms understand our expectations and ultimately help firms to avoid proposing compromises that are unacceptable to us because they fail to provide the best possible outcome for consumers.’
The FCA’s consultation is open until March 2022.