Claims management companies (CMCs) must do more to ensure their promotions do not mislead potential customers, the FCA has said.
Since the regulator took over regulation of CMCs on 1 April 2019, it has reviewed over 200 CMC adverts in various media and found widespread poor-practice in CMCs.
The FCA has therefore stated that CMC firms musty identify themselves as a claims management company; prominently state if a claim can be made to a statutory ombudsman/compensation scheme without using as CMC and without incurring a fee; and include prominent information relating to fees and termination fees which the customer may have to pay if a firm uses the term ‘no win, no fee’ or a term with a similar meaning.
“Many CMCs play a significant role in helping consumers to secure compensation. But CMCs using misleading, unclear and unfair advertising practices to get business is completely unacceptable. We won’t hesitate to take action where we consider that customers are being misled or otherwise treated unfairly by poor advertising,” FCA executive director of supervision – retail and authorisations, Jonathan Davidson said.
“Firms should also understand that we will take their compliance with our rules on financial promotions into account when considering applications for full authorisation.”
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