The Financial Conduct Authority (FCA) has released its proposed fees and charges for 2024/25 for consultation. All fee-payers are affected, including claims management companies (CMCs) regulated by the FCA. The fees also fund the Financial Ombudsman Service (FOS).
The Association of Consumer Support Organisations (ACSO) which represents companies, including CMCs, that support consumers in the civil justice system, has analysed the proposals where the FCA notes an overall funding requirement for the next year of £755m.
Key points for claims companies:
- FCA costs for 24/25 have increased by 10.7 per cent.
- The proposed allocation of FCA fees to CMCs is £2.3m vs £0.5m for 23/24, however there was a £1.6m credit last year from the Ministry of Justice (MoJ), which was previously responsible for regulating the sector.
- The FOS fees are reducing for CMCs by more than half, which indicate that there are fewer CMC-related complaints, although the FOS budget has increased overall.
- The number of regulated CMCs has fallen from 511 in 23/24 to 462.
- The FCA predicts an increase in total revenues from the CMC sector from £157.8m for 23/24 to £176.5m in the next cycle. This is the first increase under the FCA regime.
Matthew Maxwell Scott, executive director of ACSO, said: “The costs of regulation seem to be on an ever-upwards spiral, including for CMCs despite there being a near 10 per cent fall in the number of them doing business in the UK.
“On top of the fees are the significant internal costs businesses face having to maintain a compliant operation, all of which must be recouped from the consumer in the end.”
He noted that total revenues from the CMC sector are expected to jump nearly £20m to £176.5m in the next period, noting: “This could reflect current issues in the motor finance sector, where the FCA is investigating unauthorised dealer commissions for finance products, but it will not relate to personal injury, thanks to the sharp drop in activity there over the past three years since the Civil Liability Act came into force.
Maxwell Scott added: “While a well-financed regulatory system is essential, who do fee payers appeal to if they feel the proposals are too onerous?
“At some point, the National Audit Office needs to determine whether the FCA represents value for money, and the fees charged are reasonable.”
The FCA proposals can be seen here.