To be fair, not all claims handling is to the detriment of the client: for example, some specialists package cases to refer to the police for prosecution, knowing that in the absence of such a package, the police are unlikely to have the resources to proceed.

That's not what concerns the FCA: for example -

* "Often CMCs engage in claims which fall outside the FCA’s perimeter, and a customer might reasonably assume those services are covered by our rules. We engaged with 26 CMCs which process unregulated claims. Following our assessment, the majority ceased their unregulated claims activity. The number of inbound contacts we receive about unregulated claims has since fallen."

* Regulatory reporting showed several CMCs failing to comply with client assets
obligations. Most notably, historic client money was being held in client accounts, reconciliation
procedures were ineffective, and annual auditing of the client account was not being carried
out consistently. In November 2023, we engaged with all CMCs handling client money. As a
result, a third decided to stop handling client money, and we observed raised standards.
Around 80% of historic client money has now been repaid.

* We engaged with 30 CMCs who were either referring or obtaining leads
from third parties. Almost 90% were found to be non-compliant with the requirements set out
in CMCOB 2.2. Our review resulted in improved systems and controls to prevent the unlawful
processing of data. We are pleased to see the progress that has been made, but all firms
should consider what relevance these findings have to their own business processes.

But those reductions have been set off against lead generators. In the USA, these are known as "recruiters" and cases, especially in relation to healthcare, of large scale abuse are legion.

The FCA is not clear and leaves readers to imply its meaning when it says "we have observed a steady decrease in the number of CMCs, and lead generators now account for more than half of the industry. Our view remains for CMCs to be trusted providers of high-quality, good-value services that help people pursue legitimate claims for redress and benefit the public interest."

We think that is intended to imply that lead generators are coming under increased scrutiny.

There are issues that the FCA expresses particular concern about:

* misleading advertising
* Inappropriate sourcing of customers - this means not performing adequate checks on clients referred by third parties. NOTE: this is consistent with the FCA's recent stance in relation to relying on a third party's KYC for money laundering purposes.
* Poor service standards:
* Consumer understanding - this means effective communication
* Halo effect - a silly buzzword. It means being clear as to the regulatory perimeter so that clients don't assume non-regulated activities are covered by the company's approval
* Poor attitude to regulatory obligations
* Financial services claims. This is particularly interesting: there are allegations that some claims companies submit claims in bulk and overwhelm the target company so that it cannot respond within the statutory period.

The full letter, bizarrely addressed to "Dear Portfolio" and signed off "yours sincerely" is here: https://www.fca.org.uk/publication/correspondence/claims-management-com…