Experts have cautiously backed a new regulation regime which will see the FCA oversee claims management companies (CMCs), so called ‘ambulance chasers’, but say there is no time for complacency.

As of yesterday CMCs must be registered with the FCA to continue operating legally.

The development was welcomed by Matthew Drage, head of external engagement at Huntswood.

But Mr Drage signalled a cautionary tone.

He said: “Tighter regulation of CMCs from the FCA is a necessary and welcome step. 

“But whilst it will ensure more accountability, helping to drive up standards and increase transparency, providers should not assume that oversight from the FCA will mean a drop in CMC activity.

“Now is not the time to become complacent - there will always be complaints and claims made. 

“Firms should continue to focus on rectifying potential issues and enhancing controls to prevent issues from arising in the first place.”

Those sentiments were echoed by Andrew Stevens, a banking and financial services specialist at customer experience firm Quadrient.

Mr Stevens told Financial Planning Today: “The tougher rules on how these companies deal with their customers is welcome, and an important step as the industry continues to grow, with CMCs amassing more than £6.2bn between 2007 and 2017, according to a Ministry of Justice report.

“However, regulation doesn’t mean the banks should breathe a sigh of relief: CMCs will still work to identify a weakness in an industry, and attack it relentlessly.
 
“Numerous recent high-profile data breaches and new regulations like GDPR could lead customers to bring legal action against an organisation that has not adequately protected their data.

“This demand for CMCs is not going to be outstripped by the FCA’s new regulations, and to avoid becoming easy prey, organisations need to learn the lessons of PPI and Payday Loans.

“Those that understand the demands of the GDPR and of the general public; that have a culture of treating data with the respect it deserves; and that can prove that they have taken the right action at the right time, will be best equipped to avoid giving CMCs an opening to exploit.”