Earlier this week, ACSO submitted a response to the Solicitors Regulatory Authority (SRA) consultation on “protecting consumers from excessive charges in financial service claims” This seeks to bring the SRA’s rules on excessive charging into line with the Financial Conduct Authority (FCA).
The FCA held a consultation on this in January 2021, and the SRA is proposing to replicate its banding framework for Claim Management Companies (CMCs). ACSO supports this approach as it provides a level of uniformity for consumers. Furthermore, well-governed and effectively regulated CMCs 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. A well-functioning CMC market can act as a check and balance on the conduct and complaint-handling processes of businesses, which therefore serves the public interest. The fee cap intends to provide consumers with the clarity and certainty they need to make informed decisions before entering a contract with a CMC. Therefore, we broadly support the SRA’s commitment to replicating the FCA’s framework. Reputable CMCs will no doubt support the banding framework too and co-operate with the SRA and FCA to achieve it.
However, a reduction in CMC charges must be balanced with the need to maintain a viable and competitive market. While the framework intends to protect consumers, an ill-considered cap could lead to firms refusing to represent customers, thereby creating clear consumer detriment. Further, ACSO acknowledges that there will need to be exceptions to the banding framework, which the SRA consultation outlines, but the SRA needs to ensure that it does not inadvertently cause detriment. For example, someone with a complex or novel case should have the same access to justice as a consumer with a straightforward claim. Any new SRA regime must protect access to justice in addition to deterring exploitation and malpractice.
ACSO looks forward to the SRA's response.