FINANCIAL GUIDANCE & CLAIMS BILL
The purpose of the Bill is to:
-
Establish a new arm’s-length Single Financial Guidance
Body that will replace three existing providers of publicly
funded financial guidance. This measure aims to improve the
UK’s financial capability by providing a more joined-up service
to help people make effective financial decisions.
-
Strengthen the regulation of Claims Management Companies
by transferring the regulatory responsibility to the Financial
Conduct Authority.
The main benefits of the Bill would
be:
-
To provide greater clarity and make it simpler for
customers by having a single body responsible for all public
financial guidance. The current public financial guidance
service is delivered by the Money Advice Service, The Pensions
Advisory Service and Pension Wise, with services overlapping. A
single body will improve efficiency by reducing duplication and
will deliver better value for money.
-
To protect consumers from widespread malpractice across
the Claims Management Companies sector, such as nuisance calls
and encouragement of fraudulent claims, by transferring
regulatory responsibility to the Financial Conduct Authority.
This transfer will also help ensure that senior managers are
personally held accountable for the actions of their
business.
The main elements of the Bill are:
-
To establish a new statutory body, accountable to
Parliament, with responsibility for coordinating the provision
of debt advice, money guidance, and pension guidance.
-
To enable the body’s activities to be funded through
existing levies on pension schemes and the financial services
industry.
-
To transfer the regulation of claims management services
to the Financial Conduct Authority, and transfer
complaints-handling responsibility to the Financial Ombudsman
Service.
-
To ensure the Financial Conduct Authority has the
necessary powers to implement a claims management regulatory
regime. This will include a new power a which will allow the
Financial Conduct Authority to cap the fees that Claims
Management Companies charge consumers, as well as ensuring a
more robust authorisation process for new firms who wish to
enter the market.
Territorial extent and application
-
The financial guidance measures would apply to the UK,
except the provision of debt advice by the Single Financial
Guidance Body which would apply to England only as debt
administration is a devolved matter.
-
Measures on regulating Claims Management Companies would
apply to England and Wales only.
Key facts
-
There is a clear demand for the services offered by the
existing organisations. In 2015/16, Pension Wise assisted
consumers via 61,000 telephone calls and face- to-face
appointments, The Pensions Advisory Service handled 103,000
calls, and the Money Advice Service handled 300,000.
-
Claims Management Companies offer support to consumers in
relation to making a claim for compensation. They currently
operate across six sectors: financial services, personal
injury, employment, industrial injuries, criminal injuries and
housing disrepair. Financial services claims represent 59% of
market turnover and personal injury totals 40%.
-
76% of the public do not believe that Claims Management
Companies tell the truth to their customers, and
23% of Claims Management Companies faced regulatory
intervention in 2014/15.
-
The 2016 Independent Review of Claims Management
Regulation examined problems in the sector (such as nuisance
calls and fraudulent claims) and concluded that stronger
regulation was necessary. In order to deliver a step- change in
the regulation of the sector, it recommended transferring
regulatory responsibility for Claims Management Companies to
the Financial Conduct Authority.
