As a result of Carol Brady’s review of claims management regulation in 2016, HM Government has decided to regulate the subject in a new way and it seems as though the Financial Ombudsman Service will have to deal with complaints involving claims management companies.

Brady's report was commissioned by the Ministry of Justice (which regulates claims management companies at the moment) and HM Treasury. The Financial Guidance and Claims Bill, which is now on its way through Parliament, will make the Financial Conduct Authority the regulator of claims management companies.

As a result of this, the  Financial Ombudsman Service expects that it will soon have the job of assessing complaints from people who are unhappy with the service they have received from claims management companies. The Legal Ombudsman handles these concerns at present. The Legal Ombudsman’s figures show that around 95% of its current claims management company workload involves financial service claims – and a significant number of these involve payment protection insurance or PPI.

The claims management industry has grown substantially since the Claims Management Regulation Unit was first established in 2007. The composition of the market has also changed, with financial services claims having overtaken personal injury as the greatest source of turnover for claims management companies; it is estimated that CMCs have taken over £3.5 billion in consumer charges1 since 2011 for payment protection insurance mis-selling claims alone. The Ministry of Justice's claims management regulatory unit has recently received extra powers, but Brady believes that "evidence suggests that the CMC regulation regime should be put on a more robust footing." Claims management companies, she says, are widely suspected of misonduct.

The FOS says that it has been talking to the FCA, HM Treasury and the Legal Ombudsman about its next steps.