horwich farrelly

Partner Rick Preston comments on The Financial Guidance and Claims Act 2018

May, 11, 2018

Having started its life in the House of Lords in June 2017, this legislation received Royal Assent yesterday, 10 May.

The Act will come into force in stages. The sections that we have been tracking (27-35) in Part 2, relating to claims management services, begin to come into force on 10 July but with most still dependent on the making of regulations or a statutory instrument.

Man using telephone

The Act is likely to severely limit the ability of claims management companies to cold call inidividuals.

As originally envisaged, the regulation of claims management services (CMS) will pass to the Financial Conduct Authority (FCA). CMS will include offering services to bring claims for compensation, including personal injury, although the legislation is primarily targeted at the selling of financial services and CMS services in relation to PPI claims.

The FCA will have powers to restrict or prohibit any charges sought to be imposed by a CMS but in relation to legal services, the Law Society, the Bar Council and the Institute of Legal Executives will have additional powers to prevent charging.

As we outlined in March, potentially the most important provision in the Act has always been that relating to cold calling.

It had been hoped that a blanket ban would be imposed but the government considered that unnecessary.

Instead, direct marketing is limited to circumstances “where the called line is that of a subscriber who has previously notified the caller…(that he) consents to such calls being made”.

Provided the regulator enforces this section rigorously, it is difficult to envisage many circumstances where such consent will be available to a CMS in relation to a third party insurance claim.

For further commentary from Rick Preston on the legislation please visit here and here.

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