The new regulations could mean big changes to the way your CMC operates, particularly if you have previously operated in an unregulated market.
From 1st April, the Financial Conduct Authority (FCA) will take over regulation of the claims management industry, and bring regulation to the Scottish market for the first time. All CMCs need to ensure that they are compliant with the new regulations, which can seem daunting, particularly if you’ve always operated previously unregulated in Scotland.
With extensive experience operating under stringent regulations in England and Wales, Total Claims Solutions can offer help and support as your business prepares for the switch over.
One of the implications most concerning for CMCs is the rising cost of operating. As well as a huge 400% increase in application fees for companies with turnovers of over £1 million, the FCA reforms also mean higher annual fees on company turnover. Under the new regulations, companies will be charged 1.3% of every £1000 of turnover in excess of £100,000. The maximum annual fee is currently 0.9%.
On top of the cost implications of installing the necessary software and technology required to become FCA compliant, operating as an independent CMC is about to get a lot more expensive.
Another important reform businesses must be aware of in order to become compliant is the rising standards of client data protection and management. To ensure compliance with the new GDPR laws, CMCs must now be able to demonstrate a full auditable trail to show that customer data has been obtained legitimately, and with explicit consent.
As well as this, data storage and retention measures must be compliant and secure. Typically, this means an influx of new technology and IT software, including business continuity and disaster recovery systems which may be alien to your business.
Again, the purchase and installation of this technology can be a costly process for any CMC. On top of this, you may need to hire staff members with the technical expertise to manage the running of these systems, ensuring that your business remains prepared for an FCA audit.
At Total Claims Solutions, we already have the technology in place, as well as the expert knowledge to help you and your business tackle the new strict data management regulations with ease.
After April, all CMCs must record all customer calls, keeping the records for a minimum of one year after the final communication with the customer. This means that CMCs must have call recording software in place, as well as the facility to retain the recordings long-term.
As well as this, staff need to be trained to be extremely cautious not to induce or mislead on sales calls, as scripts from the calls will be subject to audit, and can be used as evidence in the event of a complaint.
Total Claims Solutions records all calls as standard, so working in tandem with us can help reduce the financial implications of this, and ensure that your business is fully compliant.
In Scotland, commission payments can currently still be made for the referral of Personal Injury work. However, following the introduction of FCA regulation referral fees will become prohibited, which could impact on the way your CMC brings work in.
If your business is struggling to get to grips with the impending reforms, we at Total Claims Solutions can help. With over 30 years of combined experience in the sector, including adapting and evolving practices to suit ever-changing regulation in England and Wales, our team can work with you to reduce the stress and financial implications of the FCA regulations.
With the clock ticking before the registration deadline, contact us today to see how Total Claims Solutions can help you.