Claims Management Company fees capped


Article by Phil

Not before time you might say.

The Financial Conduct Authority (FCA) has just announced that it intends to introduce fee caps into the Claims Management Company (CMC) market in order to protect consumers.

We have been concerned about conduct in the CMC market for some time now, not just in terms of the charges, but also the way CMC’s conduct themselves. The FCA quoted an example of a £50,000 redress award for mis selling costing a consumer £24,000 in fees where the charge was 48% including VAT! Under the new rules that fee would be £10,000.

The new fees caps are as follows:

Band Consumer redress obtained Max % rate of charge Max total fee (£)
Lower (£) Upper (£)
1 £1 £1,499 30% £420
2 £1,500 £9,999 28% £2,500
3 £10,000 £24,999 25% £5,000
4 £25,000 £49,999 20% £7,500
5 £50,000 NA 15% £10,000


Capping fees will certainly protect consumers from over charging, which is undoubtedly a good thing and will have been the FCA’s primary motivation. However, it is the potential knock-on effect of this into the Certified Financial Planner market which could be beneficial. If the new capped fees mean that CMC’s must evaluate the cost effectiveness of their business models that would be a good thing, especially if that means they withdraw from marketing for financial claims.

We are not against CMC’s per se. If someone has received bad advice they deserve to be compensated and CMC’s can provide a valuable service in helping people to achieve this. The issue we have is that the market has been too lucrative in terms of fees available to CMC’s which has encouraged them to embark on “fishing” expeditions with advice firms. That’s where they blanket market for claims and then do very little, if any, investigation themselves, but just make a complaint straight to an advice firm, hoping that they might find some evidence of malpractice in the response.

The problem with this is twofold. First it creates a lot of unnecessary work for Certified Financial Planners, but second and more importantly it means that advice firms have to report the claims to both the FCA and their Professional Indemnity Insurers (PII).

This is where the harm is done, because PII Insurers view claims poorly and this almost always leads to increases in premiums to advisers. The direct effect of this is that advisers have to put prices up and pass these costs on to customers.

It’s a vicious cycle that’s been going on for years. Hopefully, this new fee cap will help to put an end to it. Who knows PII premiums might come down and in turn adviser fees?

Duck to avoid the flying pigs!

How a Financial Planner Can Help You

Video produced by the Personal Finance Society and ITV to explain how a Financial Planner can help you to achieve your financial goals.

If you have any questions for our Certified Financial Planners please feel free to give us a call on 01282 614444 or drop us an e mail to

Awards and Accreditations

Pension Transfer Gold Standard
Financial Vulnerability Taskforce
VF 23
Vouched For 2022
Vouched For 2021
Vouched For 2020
Vouched For 2019
Vouched For 2018
Vouched For 2017
Vouched For 2016
Vouched For 2015
Vouched For 2014

Overall and excellent service from Adele – thank you!

Mrs W

Highly recommended to friends and relatives. Contacting Christina was the best thing we ever did. We wouldn’t be in the financial position that we are, without her.

Mr & Mrs L

We’ve only been clients for a couple of months, but we both feel that we have made the right decision. After first meeting Adele she put our minds at rest.

Mr & Mrs P