Claims management companies (CMCs) handle a range of claims for compensation or other benefits. Find out what to expect if you decide to use one.
CMCs are firms or individuals that can help you make a claim, but they’ll charge you a fee for the service.
For example, if you think you've been mis-sold a financial product or service, you could use a CMC to help you complain. Or, if a financial firm goes out of business, a CMC could act on your behalf to help you claim compensation.
You don’t need to use a CMC to make a claim, it’s free and simple to do it yourself. If you’re concerned about the process, you can also get free guidance from MoneyHelper[1]. Find out more about making a claim yourself.
If you choose to use a CMC, it may:
- Investigate your claim and represent you.
- Help you deal with any paperwork.
- Put you in touch with lawyers, if needed.
CMCs should also be able to let you know the likelihood of your claim being successful. If it’s unlikely to succeed, they should tell you.
Some CMCs may only act as lead generators. A lead generator identifies any possible claims you may be able to make, and then refers you to other CMCs or lawyers who may be able to help you.
Fees for using CMCs
It’s important to remember that, if you use a CMC, you’ll need to pay a fee. To make sure you get fair value for money, we introduced a cap to the fees you can be charged for financial services claims.
For claims started on or after 1 March 2022, the maximum fee you pay will depend on the value of your claim.
| How much you're awarded | Maximum % you can be charged (excluding VAT) | Maximum fee you can be charged (excluding VAT) | Maximum fee you can be charged if VAT is included |
|---|---|---|---|
| £1 to £1,499 | 30% | £420 | £504 |
| £1,500 to £9,999 | 28% | £2,500 | £3,000 |
| £10,000 to £24,999 | 25% | £5,000 | £6,000 |
| £25,000 to £49,999 | 20% | £7,500 | £9,000 |
| £50,000+ | 15% | £10,000 | £12,000 |
If a lead generator is involved in your claim, they may also be paid a fee by your CMC or lawyer for passing on your case.
The fee cap doesn't apply if you choose to pursue a claim in court with a CMC. You may pay a higher percentage of any compensation you receive.
Watch: Using CMCs
FCA explains: Making financial services claims and using claims management companies
Making a claim yourself
If you want to make a complaint or claim compensation yourself, you’ll have to follow the right process. If you’re concerned, organisations like MoneyHelper may be able to help you.
Read more about:
- Complaining about a financial product or service[9].
- Claiming compensation if a firm goes out of business[10].
If your claim is about a pension, The Pensions Ombudsman[11] may be able to help. You can find more information about how to get compensation for a pension problem[12] from MoneyHelper.
What to expect if you decide to use a CMC
CMCs that are authorised by us must follow our rules.
They should carry out thorough onboarding checks to make sure you’re not already represented by another CMC or firm. If you are, they should ask you which firm you want to continue with. They should only enter into an agreement with you once you have ended any previous agreements.
They must also:
- Provide you with a 1-page summary of all the key information, before you sign a contract, including your cancellation rights.
- Supply a detailed breakdown of how they will charge you, including examples (this may be called a 'cost illustration').
- Offer a 14-day cooling off period during which you can cancel your contract without being charged.
- Update you on key developments with your claim.
- Tell you clearly about schemes such as the Financial Ombudsman Service or the FSCS, or any other official ways you can claim.
- Ask you to confirm that you don’t want to make a claim by yourself for free, if you’re making a financial services claim.
- Clearly explain how to complain if you’re unhappy with the service they provide.
They must not:
- Send you emails or texts (unless you’ve agreed to receive them).
- Make marketing calls to you unless you’ve specifically agreed to receive them.
- Approach you in person.
- Use any form of high-pressure selling such as asking for on-the-spot decisions.
- Charge you more than what's allowed under our fee cap rules.
If you receive an email or letter you didn’t ask for, you can report it to the Information Commissioner’s Office (ICO)[19]. The ICO oversees data protection and electronic marketing rules and can act where firms contact people unlawfully.
If you see a financial promotion or advert that’s unclear or misleading, you can report it to us[20].
You can also forward suspected spam or scam texts to 7726, a free service run by mobile providers.
Please check the individual legal regulators’ websites for information on what rules CMCs authorised by them must follow.
After you appoint a CMC
When you appoint a CMC authorised by us, it should keep you informed about the progress of your claim and let you know about any developments.
If fees become payable, it must give you an itemised bill setting out the work undertaken and how charges have been calculated.
If your claim is not successful, the firm should explain the next steps available to you, including any routes for pursuing the matter yourself.
If you choose to end your agreement
If you cancel your agreement after the 14-day cooling-off period, you may be charged a fee. You should check that any itemised bill aligns with what you were originally told you would be charged.
Termination fees must reflect the work carried out by the CMC and must not exceed what is reasonable in the circumstances.
You should consider the level of work completed and question any terms that appear unfair or unreasonable. If you signed up without being given the facts, you can complain.
Complaining about a CMC
If a CMC is authorised by us and you're unhappy with how it's handled your case, find out how to complain[9].
If the firm is regulated by the SRA, you can complain to the Legal Ombudsman[21].
