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The Regulator is Mulling Over a Cap on Chargeable Fees Levied by Personal Injury CMCs

It's come to light that the Financial Conduct Authority (FCA) is currently weighing up the validity of placing a cap on the fees that personal injury claims management firms (CMCs) can charge.

Personal injury - Image Pixabay

It has been suggested in some quarters that the FCA should consider liaising and perhaps coordinating with the Solicitors Regulation Authority (SRA) should they make a final decision to go ahead with such a cap in the coming months.

The Financial Guidance and Claims Act

The Financial Guidance and Claims Act (2018) placed the FCA front and center in matters relating to creating suitable rules that might add restrictions on claims management companies. The area of focus is usually around both claims on financial products and for financial services claims too.

The FCA was given new powers in other areas such as criminal injury, personal injury, housing disrepair, and employment issues too. In particular, they can prepare their own rules putting limits on what charges can be levied for claims that are under a CMC's management.

Fee Caps and How Best to Go About It

Fee caps for CMCs is a new thing and so the FCA is treading carefully. They're looking to gather as much information first before reaching a decision on what, if any, caps should be placed on the fees charged by CMCs.

In keeping with this careful approach, a request for information has been dispatch to a collect of CMCs that might be affected by any new rules enacted. Based on the information supplied and following discussions with current or previous CMC customers, the FCA could publish a consultation paper.

Publishing a paper would allow them to share their initial thoughts on the matter and perhaps make suggestions on how they may levy fees while seeking informed responses from the CMC industry. Such responses may then adjust their plan based on feedback, so that a better final solution can be reached.

CMC Still Have Their Place in the Personal Injury Landscape

Dealing with personal injury cases is never easy. There's a lot of emotion on the side of the parties involved in the dispute and seeking to get compensation. Indeed, across the pond, personal injury attorneys are kept busy with new cases where they pursue the best settlement for their client. They know that the decision of when to hire a personal injury lawyer is an important one because the person who's suffered an injury is not in a good state of mind to negotiate successfully on their own behalf.

In the UK, it seems clear that with the call for the FCA to work with the Solicitors Regulation Authority to reach a fair-minded conclusion that will support people who need to make a claim, the relevant authorities have the right idea. Indeed, the planned introduction of the Civil Liability Act in 2020 to change existing regulations to reduce or remove confusion for consumers will be another step in the right direction.

It's clear that how personal injury cases are represented or negotiated in the UK is under review and some new restrictions may come into place. However, the changes are likely a couple of years away yet.

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