On 20 September 2018, the FCA published Consultation Paper 18/26: Claims management companies: how we propose to apply the Senior Managers and Certification Regime, (CP18/26).

Claims management companies (CMCs) will be regulated by the FCA from April 2019, and as such will be required to comply with the Senior Managers and Certification Regime (SM&CR), particularly given that evidence exists of misconduct among some firms in the CMC sector, which has been shown to be harming customers.

The key proposals for CMCs in relation to the SM&CR are:

  • a small number of senior roles within CMCs Senior Management Functions (SMFs) will be created. People doing these jobs will need to be approved by the FCA and maintain a document that says what they are responsible and accountable for;
  • senior Managers will have a ‘Duty of Responsibility’ – if something goes wrong in an area that they are responsible for, the FCA will consider whether they took ‘reasonable steps’ to stop this from happening;
  • the certification regime is proposed for individuals who aren’t senior managers in CMCs but who could have a significant impact on customers of the firm;
  • annually, CMCs will need to make sure that the individuals performing senior management functions and certification functions are ‘fit and proper’ to do their jobs; and
  • standards for the conduct of nearly everyone who works in a CMC are proposed to be introduced to improve the overall professional behaviour of staff.

The FCA hopes that the proposals in CP18/26 will help increase the responsibility of senior staff in CMCs and increase a sense of accountability for staff. The deadline for responses to CP18/26 is 6 December 2018.