CMCs

Your rights when using a claims management company – and free alternatives to ensure you keep all of your compensation.

What is a claims management company?

Claims management companies, or CMCs, help people make claims against companies for a share of any compensation won. 

The PPI mis-selling scandal – which peaked between 1990 and 2010 – led to the sudden growth of CMCs and unfortunately bad practice was rife and went largely unpunished. The Financial Conduct Authority took on the job of regulating them in 2019 and imposed stricter rules for how CMCs engage with their customers and the fees they can charge. 

We explain these rules so you know what to look out for if you decide to use a CMC.

Your rights when using claims management companies

If you have been mis-sold a product or service or suffered a personal injury you might decide to use a CMC to help you claim compensation.

A CMC should be able to give you advice on the likelihood of your claim being successful. It will offer services to help you investigate your claim, deal with the paperwork and, if necessary, put you in touch with lawyers.

Most CMCs are regulated by the Financial Conduct Authority and must do the following: 

• Provide you with a 1-page summary of all key information before you sign a contract
• Give you a detailed breakdown of your fees, including examples (sometimes called a ‘cost illustration’)
• Offer you a 14-day cooling off period during which you can cancel your contract without any penalty
• Keep you updated as your claim develops
• Tell you about other routes for making complaints – for example, by complaining to the Financial Ombudsman
• Ask you to explicitly confirm you don’t want to make a claim by yourself for free
• Explain how you can complain if you’re unhappy with the service

There are things CMCs should not do too:

• Send you emails or text messages, unless you’ve agreed to receive them
• Make marketing calls to you unless you’ve explicitly agreed to them
• Approach you in person
• Use high-pressure selling techniques – like asking you to make on-the-spot decisions
• Charge you more than the maximum fee or % charge based on your claim value.

Who regulates claims management companies?

CMCs must be regulated by the Financial Conduct Authority to provide claims management services for:

• Financial services and products (e.g. car finance mis-selling or PPI claims)
• Personal injury (e.g. medical negligence or road traffic accidents)
• Employment problems (e.g. unfair dismissal or treatment, or injuries caused by work)
• Criminal injury (e.g. physical or mental injury caused by criminal activity)
• Housing disrepair (e.g. harms caused by tenants due to things like electrical faults, mould and damp, leaks or flood, or insect infestation)

If you decide to use a CMC for claims related to any of these areas then check they are on the Financial Conduct Authority register.

Legal professionals providing claims management services tend to be regulated by one of the legal regulators:

• Solicitors Regulation Authority register
• Barristers’ register
• Authorised Probate Practitioners directory
• Law Society of Scotland register

Fees you can expect to pay a CMC

A CMC will charge you a fee for using its services. The Financial Conduct Authority introduced price caps to the fees CMCs can charge for claims starting on or after 1 March 2022. 

Value of your claim	Maximum % you can be charged	Maximum fee you can be charged
£1 to £1,499	30%	£420
£1,500 to £9,999	28%	£2,500
£10,000 to £24,999	25%	£5,000
£25,000 to £49,999	20%	£7,500
£50,000 or more	15%	£10,000

So, for example, if you have a claim that’s worth between £10,000 and £24,999, a CMC can charge no more than 25% or £5,000, whichever is lower.

Only claims regulated by the Financial Conduct Authority are covered by these price caps.

Free ways to claim for compensation

Sometimes it can be just as easy to make complaints or compensation claims for free – as we illustrated in our car finance commission claims article.

Here are other examples of free ways to make complaints and claims:

Type of claim	Free compensation help
Criminal injury claims	You can claim compensation for free if you’ve been a victim of a violent crime.
Employment claims	You can make a claim to an employment tribunal and get free employment advice from ACAS.
Financial product or service claims	You can escalate unresolved complaints or claims to the Financial Ombudsman Service.
Financial firms going out of business or owing you money	Make a claim for free by using the Financial Services Compensation Scheme.
Housing disrepair claims	The Housing Ombudsman Service can help you make residential claims.
Pension claims	Free routes for getting compensation for a pension problem.

Problems to watch out for with CMCs

Be alert to the types of problems you want to avoid when using a CMC, including:

• Fees not being clearly explained before you enter a contract. 
• Fees changing during the course of a contract.
• Poor communication about the progress of your claim.
• Unnecessary delays to the progress of your claim.
• Inappropriate or incorrect claims advice.
• Failure to follow your instructions.
• Difficulty getting in touch or failure to respond when you contact them.
• Passing your claim onto another CMC without telling you.
• Contacting you repeatedly without your consent.

How to complain about a problem with a CMC

If you’re unhappy with the service that’s been provided by a CMC then the first thing to do is make a formal complaint to the firm you’ve been dealing with. Explain the problem and tell them what you want them to do to put things right.

FCA-regulated CMCs should confirm receipt of your complaint and then have up to eight weeks to resolve it. If you’re unhappy with their response or they don’t respond at all then you can escalate your complaint to the Claims Management Ombudsman, which is part of the Financial Ombudsman Service.

The ombudsman is an independent dispute resolution service, and it’s free and easy to use. It can handle group or individual complaints. It will investigate your complaint, talk to the company and then decide whether to uphold your complaint. The firm must comply with any decision from the ombudsman.