FCA tells CMCs what it expects

FCA has written a Dear CEO letter to CMCs who have temporary permissions telling them how it expects them to behave then making financial promotions or acting for their customers. There has been an increase in cases where CMCs are either acting without evidence of appropriate customer authority or are submitting letters of authority and claims in fictitious customer names, or where there is no relationship between the customer and the financial services provider that receives the claim.  There are also increasing cases of non-compliant financial promotions.

FCA reminds CMCs they are expected to comply with its rules and notes a few in particular – whilst stressing that the letter is not a full list of issues CMCs present:

  • carrying out a free PPI check is a regulated activity and should be done in compliance with CMCOB
  • getting a customer’s authority means complying with data protection legislation and CMCOB
  • CMCOB sets out the steps firms must take to establish the existence and merits of potential claims and how they must carry out investigations
  • systems and controls must be able to cope with vulnerable customer needs and increases in customer numbers
  • financial promotions often fail to be compliant by, for instance, not setting out fees, giving customers the impression they will get a better outcome by using the firm where in fact a service like FOS would be available free, and giving incorrect status disclosure

The letter ends with a stark warning not to ignore it and explaining that FCA can remove a temporary permission or refuse to authorise a firm if it does not comply with rules or meet threshold conditions.



Emma Radmore