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Background to the FCA regulation of claims management activities

The Claims Management Regulation Unit (CMRU) was established within the Ministry of Justice (MoJ) in April 2007 to directly regulate claims management companies (CMCs). Since then, the government has become increasingly concerned about misconduct in the claims management sector. In 2015 it commissioned the independent Brady Review to examine the nature and extent of the problems in the market and make recommendations to improve the way it was regulated.

The final Brady Report made a number of recommendations to enhance the authorisation, supervisory and enforcement processes for the regulation of CMCs. The Report found that, in principle, the most suitable option would appear to be a new, standalone independent regulator focused solely on CMC regulation. However, given the government’s drive to reduce the number of public and arms-length bodies, and the fact that establishing an entirely new organisation would likely be more expensive than other options, the Report noted that, of the remaining options, strengthening the existing MoJ-based regulator and passing responsibility to the Financial Conduct Authority