The FCA has announced proposals to stop the practice of ‘claims management phoenixing’ by banning claims management companies (CMCs) from managing FSCS claims where they have a relevant connection to the claim.
Claims management phoenixing is when an individual connected with a wound-up financial services firm reappears in connection with a CMC and, in doing so, seeks to benefit from the former firm’s poor conduct by carrying on claims management activities against it.
The FCA has stressed that if the claims management regime is used by individuals in failed firms to benefit from their own misconduct:
- public confidence in the regulatory system and the integrity of the market will be undermined;
- firms will be incentivised to act against the interests of their customers; and
- CMCs who have not benefited from phoenixing will suffer a competitive disadvantage.
The consultation closes on 21 June 2021.