The Association of Consumer Support Organisations (ACSO) has responded to the Solicitors Regulation Authority (SRA) discussion paper on restricitng fees for some claims mangement services.
Rachel Cairnes, policy and public affairs advisor at ACSO, said "[claims] management activities play an important role in helping consumers to secure redress, not least for those who may otherwise be unable or unwilling to bring a claim themselves. Moreover, as recognised by the FCA, a well-functioning claims management sector serves as a check and balance on the conduct and complaint-handling processess of businesses.
"The proposed fee cap of between 15 - 30 per cent of redress is, as with all proposed fee caps, arbitrary. A reduction in claims mangement charges must be balanced with the need to maintain a viable and competitive market. An ill-considered cap could lead to law firms refusing to take on cases, thereby leading to clear consumer detriment. Any new regime must protect access to justice in addition to deterring exploitation and malpractice.
"The Financial Guidance and Claims Act 2018 does not provide a definiton of an excessive fee, nor does it outline an indicative guidance on what would be regarded as an excessive fee. The FCA defined excessive charges by attempting to establish whether the fees paid exceeded the average value of the service provided to consumers and an indicative quantification of the harm this causes". Cairnes continued by highlighting how the FCA does not take into consideration the value that CMCs provide to consumers in the form of experise, which is particularly important in high-value or complex claims.
"In adopting the FCA's proposals, so too the SRA will risk undermining the value of expertise provided by law firms for claims managment agreements and activities.
"If clear consumer harm has been identified, then fee caps and financial restrictions should be used as a last resort only when all other alternatives have been considered and tested... price controls can reduce the quality of a service, hamper innovation and distort markets through a lack of competition."
Cairnes stressed the need for the SRA to conduct research on whether the FCA's proposals can be effectively and fairly applied to law firms carrying on claims management work. "As responses to this discussion paper can only be submitted via an online form, stakeholders are unable to send any additional evidence they may have to support their views, for example in the form of attached documents or files. The SRA must engage directly with relevant stakeholders to understand better the consequences of adopting the FCA's proposals."
ACSO members can download the submission in full from the members' area of the website.