The UK government has transferred supervisory responsibility for regulating claims management companies (CMCs) to the Financial Conduct Authority (FCA) from the Ministry of Justice as part of yesterday’s Budget statement. The decision comes after recommendations were published in an independent review, which looked at implementing much more rigorous regimes for these firms.
Senior staff at CMCs will be scrutinised by the FCA’s new Senior Managers Regime, which makes them liable for their actions.
“The new regime will be tougher and will ensure CMC managers can be held personally accountable for the actions of their businesses,” said the budget document.
The dates for the transfer will be announced “in due course”, but actuaries and the insurance industry have already welcomed the news.
Fiona Morrison, president of the Institute and Faculty of Actuaries, believed the move would be beneficial for consumers, adding: “Further regulation of the sector could help protect consumers from higher insurance premiums caused by the filing of unnecessary claims.”
Graeme Trudgill, executive director at the British Insurance Brokers’ Association (BIBA), described the change as a “wise move”. He said: “For too long some rogue companies have been able to hassle customers, possibly generating fraudulent claims that ultimately are paid for by innocent customers.”
BIBA estimated that fraudulent whiplash claims added 20% onto car insurance premiums and the lack of sufficient, effective regulation of CMCs “has fuelled exaggerated claims”.
Huw Evans, director general of the Association of British Insurers, also welcomed the news.
“For too long the regulation of claims management companies has not been fit-for-purpose, leaving the public at the mercy of unscrupulous firms who make nuisance phone calls and encourage frivolous and fraudulent claims,” he said.
Senior staff at CMCs will be scrutinised by the FCA’s new Senior Managers Regime, which makes them liable for their actions.
“The new regime will be tougher and will ensure CMC managers can be held personally accountable for the actions of their businesses,” said the budget document.
The dates for the transfer will be announced “in due course”, but actuaries and the insurance industry have already welcomed the news.
Fiona Morrison, president of the Institute and Faculty of Actuaries, believed the move would be beneficial for consumers, adding: “Further regulation of the sector could help protect consumers from higher insurance premiums caused by the filing of unnecessary claims.”
Graeme Trudgill, executive director at the British Insurance Brokers’ Association (BIBA), described the change as a “wise move”. He said: “For too long some rogue companies have been able to hassle customers, possibly generating fraudulent claims that ultimately are paid for by innocent customers.”
BIBA estimated that fraudulent whiplash claims added 20% onto car insurance premiums and the lack of sufficient, effective regulation of CMCs “has fuelled exaggerated claims”.
Huw Evans, director general of the Association of British Insurers, also welcomed the news.
“For too long the regulation of claims management companies has not been fit-for-purpose, leaving the public at the mercy of unscrupulous firms who make nuisance phone calls and encourage frivolous and fraudulent claims,” he said.
“It should go a long way to driving the cowboy operators out of town and helping to ensure honest customers don’t end up footing the bill for their dodgy practices.”
care of http://www.theactuary.com/news/2016/03/fca-to-regulate-claims-management-companies-following-budget/
