New rules about what claims management companies can charge consumers owed compensation have been introduced today by the Financial Conduct Authority.
From now on, fees must depend on how much redress consumers are owned, so if the redress is below £1,500 then consumers can only be charged up 30% of their claim. These new regulations are expected to save consumers £9.6m a year.
The rules also stipulate that claims management companies must reveal key details about the process before entering into a contract, such as how fees will be calculated.
Sheldon Mills, Executive Director of Consumers and Competition at the FCA, said: “Our rules protect consumers from losing a significant amount of their compensation in excessive fees, particularly when there are ways for them to make claims without incurring any fees.
“The changes are part of our ongoing work to drive a fundamental shift in industry mindset so we can stop consumer harm before it happens, and to ensure more consistent standards of protection.”
