"While there are many instances where claims management companies provide valuable support to consumers entitled to compensation, there is a need for tighter enforcement of regulations."
The FCA will be given the necessary powers to implement a claims management regulatory regime. This will include a new power a which will allow the FCA to cap fees as well as ensuring a more robust authorisation process for new firms who wish to enter the market.
The government says 76% of the public do not believe that claims management companies tell the truth to their customers, and 23% of such firms faced regulatory intervention in 2014/15.
The Bill will also establish a new single financial guidance body that will replace three existing providers of publicly funded financial guidance - the Money Advice Service, The Pensions Advisory Service and Pension Wise.
The government believes the services currently overlap and that the introduction of a single body will improve efficiency by reducing duplication and will deliver better value for money.
The new body’s activities will be funded through existing levies on pension schemes and the financial services industry.
Keith Richards, Chief Executive of the Personal Finance Society, commented: "In light of today’s Queen’s Speech, the Personal Finance Society welcomes the Government’s decision to put the FCA in charge of regulating claims management companies. The FCA has the resources needed to enforce the existing regulation.
"While there are many instances where claims management companies provide valuable support to consumers entitled to compensation, there is a need for tighter enforcement of regulations.
"Better enforcement will bring two significant benefits for customers. First, they will be less likely to be pestered by claims management companies in unethical ways.
"Second, they won’t have to pay premiums that are inflated by unscrupulous firms coaching people into making frivolous or fraudulent claims.
"Cracking down on these firms using a proven regulator is welcome news and we look forward to working with the FCA and other important stakeholders to make a success of the new regime."
