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Financial Regulator Cracking Down on “Rogue” Claims Management Firms


The Government’s financial regulator is cracking down on “rogue” claims management companies (CMCs) for using “underhand tactics” to target Port Talbot steelworkers.

The Financial Conduct Authority (FCA) has written to reprimand CMCs after some were accused of poor behaviour and underhand tactics to gather the personal data of workers.

CMCs have been targeting Port Talbot steelworkers ever since it emerged up to 3,000 were badly advised to transfer out of the British Steel company pension scheme and could claim thousands from their advisers or a national compensation pot in an effort to recoup their losses.

Cold calling – which CMCs are prevented from doing by law – has been taking place in the town and, in one case, a caller even pretended to be from the Ministry of Justice in an attempt to gather personal data from a worker.

The FCA’s letter, sent from the regulator’s director of supervision Jonathan Davidson, said failure to comply with its rules could see CMCs forced to change their business practices through even stricter regulation.

“I am writing to remind you of our expectations of CMCs when they carry out financial promotions and/or act for their customers,” the letter reads. “This is because we have recently seen an increase in problem cases and want to ensure customers’ interests are protected.”

It outlines several examples of “problem” behaviour, for example CMCs acting for their customers without gaining appropriate consent or completed letters of authority and that firms had been submitting letters of authority and claims under fictitious customer names.

The financial watchdog also revealed some CMC firms had been using marketing and advertising in Port Talbot that was not FCA-compliant.

The FCA’s letter added:

“We will take the matters in this letter into account when we assess your application for authorisation and when we supervise your firm.”

Philippa Hann, a partner at national law firm Clarke Willmott, is handling almost 200 cases for Port Talbot steelworkers.

She said:

“Both solicitors and CMCs are prevented from cold-calling by their regulators.

“Cold-calling is invasive, dangerous and, at best, a nuisance. It begs questions as to where the personal data has been obtained and is the behaviour of rogues.

“If you receive a call from anyone purporting to be able to assist you with a claim and you have not previously given them permission to contact you, they are using underhand tactics and are acting in breach of the regulations.

“I would strongly recommend people terminate such a call immediately and report the caller to the Solicitors Regulatory Authority or the FCA.

“If these people are prepared to blatantly flout the regulations in place to protect consumers, what other steps might they take to tie you into a contract that is not in your best interests?”

She added:

“CMCs do not have the legal expertise of solicitors, nor do they have the same regulatory obligations and professional indemnity insurance. Counterintuitively, solicitors will often be less expensive than CMCs yet we offer far more expertise and protection to their clients.”