FCA Fee Cap on CMCs: Compliance Insights for Firms

This presentation explains the FCA’s fee cap on Claims Management Companies (CMCs) and its impact on the industry. It highlights the purpose of the cap, key compliance requirements, and the need for transparency when charging consumers. Learn how MEMA Consultants helps firms adapt to these regulations, safeguard customer trust, and remain compliant with FCA standards.

1. FCA Fee Cap on CMCs
Understanding the New Regulations

2. Introduction to the Fee Cap
The FCA’s price cap for Claims Management Companies
(CMCs) comes into existence on 1 March 2022.
This regulation introduces five redress bands, each with a
defined maximum fee.

3. Key Requirements for Firms
Fee Illustration Reasonable Fees
Provide customers with a fee
illustration for each redress
band.
Ensure fees are reasonable for
non-PPI claims outside the
cap's scope.
Prompt Estimates
Promptly give customers an
estimated fee once sufficient
information is available.

4. Customer Communication And Disclosure
Payment Clarity Illustrations And
Understanding
Pre-Contract Disclosure
Make it clear to consumers
that CMC fees may need to
be paid from other funds.
Provide illustrations within
applicable fee bands and help
customers understand fees,
especially when redress is
not paid in cash.
Disclose key information to
consumers at the pre-
contract stage for informed
decisions.

5. Scope of the Fee Cap
New ClaimsPre-existing Contracts
The cap does not apply to pre-existing contracts
unless fees are increased or new fees are added.
New claims added to a contract or not authorized until
after the rules came into force will be subject to the cap.

6. FCA Monitoring And
Compliance
The FCA will monitor the fee cap's
effectiveness through regulatory returns and
ongoing supervisory work.
They will assess if fees are clustered under the
cap and if firms are treating customers fairly
(Principle 6 and CMCOB 2.1.1R).

7. MEMA Support

Contact MEMA
MEMA is supporting clients with fee cap readiness.
Reach out to us for a conversation on the steps you require.

8. Secure Solutions for
a Regulated World
Bridging Compliance and Business Excellence
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ights-blog-posts/fca-fee-cap-on-cmcs