CLAIMS MANAGEMENT

From 1 April 2019, Claims Management became an FCA regulated activity and any firm that wanted to be involved in this area needed to obtain the relevant permissions and follow an increased rules regime.

Claims Management covers 6 different permissions:

1. Seeking out of claims or potential claims -  persons who may have a claim 

2. Referrals of claims or potential claims - referring details of a claim, potential claim or of a claimant, or potential claimant to another person 

3. Identification of claims or potential claims - identifying a claim, potential claim or a claimant, or potential claimant 

4. Advice in relation to a claim - providing advice in relation to a claim or potential claim 

5. Investigation in relation to a claim - investigating or commissioning the investigation of the circumstances, merits or foundation of a claim with a view to using the results in pursuing the claim

6. Representation in relation to a claim - representation in writing or orally, regardless of the tribunal, body or person before which or to whom the representation is made

Prior to this date, it was not unusual for an adviser to helpfully assist their clients in identifying a potential cause for complaint in relation to previous advice received from another firm. The adviser would generally have assisted clients in looking further into the complaint and helping them reach a satisfactory conclusion. Following the implementation of the regulation of CMCs and the permissions, this was no longer possible.

If you notice something that may have gone awry in a previous firm’s advice, we think it’s possible to point out that the client could have grounds to complain against a previous advice firm but the adviser should have no further involvement – though we would expect this to be client driven in most instances. That, however, should be where it stops. You shouldn’t be involved in any complaint, advise them to complain or investigate it yourself or make a cut or fee for doing so.. If you do any of these then the FCA could view this as a regulated activity and a requirement to have the CMC permissions, which of course advisers tend not to have. 

You may be able to refer the client to a CMC or legal professional but you need to be careful with that too. If you simply give the client a name of a firm to contact, receive no payment and have no involvement (client contacts directly) then it shouldn’t fall into the referring details of a claim to another person activity.

If you wish to take it further, then you should consider applying for the relevant permissions.