Financial Guidance and Claims Bill [HL]: Briefing for Lords Stages
Further to the second reading of the Financial Guidance and Claims Bill on 5 July 2017, this Lords Library Briefing provides background to the Bill and a summary of its main provisions.
The Financial Guidance and Claims Bill is a government bill introduced in the House of Lords on 22 June 2017. It is scheduled to have its second reading on Wednesday 5 July 2017. The Bill would make provision in two areas.
Firstly, it would merge three existing, government-sponsored, financial and pension guidance services: the Money Advice Service, the Pensions Advisory Service and Pension Wise. In so do doing, it would create a new Single Financial Guidance Body (SFGB). The Government has stated that this is part of a commitment to “ensure that members of the public can access good-quality, free-to-client, impartial financial guidance and debt advice”. The provisions in the Bill follow three consultations conducted by the Conservative Government in the previous parliament.
Secondly, the Bill would make changes to the regulation of Claims Management Companies (CMCs). CMCs provide advice and services to assist people in making compensation claims in various sectors, such as personal injury and financial products. The Government has expressed concern that “there is evidence of malpractice” in the industry, and in 2015 the previous Conservative Government commissioned an independent review into the regulation of the claims management sector. Following the publication of the review in March 2016, the Government said it would change the regulatory system for CMCs. The Bill would enable this by transferring regulatory responsibility from the Ministry of Justice to the Financial Conduct Authority (FCA). Complaints handling would be transferred from the Legal Ombudsman to the Financial Ombudsman Service. The FCA would also be given the power to impose a cap on the fees that CMCs can charge for their services.
The 2017 Conservative manifesto stated that a Conservative government would also consider a ban on companies “cold calling people encouraging them to make false personal injury claims”. The Cabinet Office’s background briefing for the Queen’s Speech in June 2017, stated that changing the regulator of CMCs to the FCA would protect consumers from malpractices such as “nuisance calls and [the] encouragement of fraudulent claims”. Additionally, the manifesto stated a Conservative government would address “exaggerated and fraudulent whiplash claims”. The Cabinet Office’s briefing explained that this latter measure would be taken forward in a future ‘Civil Liability Bill’.