On 20 August 2018, the FCA published Consultation Paper 18/23: Claims management companies: recovering the costs of FCA regulation and the Financial Ombudsman Service (CP18/23). The consultation comes ahead of responsibility for claims management regulation passing from the Claims Management Regulator to the FCA on 1 April 2019, which will bring claims management companies (CMCs) within the FCA’s regulatory scope.  Responsibility for considering complaints about CMCs will transfer from the Legal Ombudsman Service to the Financial Ombudsman Service (FOS). In CP18/23 the FCA sets out proposals for recovering the associated transfer costs and the FOS’ ongoing costs.

CP18/23 applies to all existing CMCs seeking to continue trading from 1 April 2019, and to businesses considering establishing CMCs in the future. CP18/23 explains how the FCA proposes to set the fees that will recover their costs from firms, both under the temporary permissions regime outlined in its June consultation (see here for further information) and for regulation in the long term. Specifically CP18/23 outlines:

  • long term fees structure: authorisation fees, periodic fees, and the definition of turnover as the base for payment of fees (chapter 2);
  • short term arrangements for temporary permissions: payments in advance of 2019/20 periodic fee (chapter 2); and
  • proposals for the Financial Ombudsman Service general levy and the Financial Services Compensation Scheme (chapter 3).

A draft FCA Handbook instrument is included in Appendix 1 of CP18/23. The deadline for comments on CP18/23 is 22 October 2018.