The Financial Conduct Authority has refused to authorise a claims management company after it raised concerns about how defined benefit file reviews were checked.
In a final notice the watchdog said it had chased FS Claims Ltd with four letters, and numerous emails and telephone calls over a six week period last summer.
The FCA assumed control of CMC regulation last year, taking over from the Claims Management Regulator, and received requests from more than 900 companies to continue trading under the new regulator.
The watchdog raised a sizeable list of concerns about FS Claims’s business plan and practice, which the FCA asked for more information about as part of its authorisation process.
The FCA said: “FS Claims stated it would conduct 100 per cent of its sales via the internet but had not provided any examples of the material it intended to use, or explained how it would ensure that material is fair, clear and not misleading.
“FS Claims’ business plan stated that file reviews would be outsourced to an independent financial advisor [sic] specialising in final salary pension investments. FS Claims had not explained how it would satisfy itself that the IFA would be competent to perform those reviews either at authorisation or on an ongoing basis.”
The FCA’s requests also included the company’s vulnerable client policy, details of how it would ensure the security of client money and monthly cash flow and profit and loss calculations.
The watchdog said FS Claims had also failed to explain how it would ensure customers were informed they could also complain to the Financial Ombudsman Service for free and did not provide a date of birth for the firm’s sole director nor any evidence of recent experience of running a CMC.
The FCA said it expected firms seeking authorisation to engage with it in an “open and cooperative” way and warned it was not convinced FS Claims would conduct its business with “integrity and in compliance with proper standards”.
Over the course of several months the company requested several extensions to the regulator’s deadlines, claiming relevant employees were on annual leave and a change in compliance support, but ultimately failed to provide any of the necessary information.
In a final notice published on January 29 the FCA confirmed it had refused the application for authorisation.
Since taking over responsibility for regulating CMCs, the FCA has warned the sector on unacceptable advertising and highlighted low uphold rates could work against a CMC when it comes to authorisation.
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