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CMCOB 2.1 General principles

CMCOB 2.1.1R

1A firm must act honestly, fairly and professionally in accordance with the best interests of its customer (the client’s best interests rule).

CMCOB 2.1.2R

1A firm must establish and implement clear, effective and appropriate policies and procedures to identify and protect vulnerable customers.

CMCOB 2.1.3G

1Customers who have mental health difficulties or mental capacity limitations may fall into the category of particularly vulnerable customers.

CMCOB 2.1.4R

1A firm must not engage in high pressure selling in relation to regulated claims management activity.

[Note: CAPR CSR 3]

CMCOB 2.1.5R

1A firm must not carry out a cold call in person.

[Note: CAPR CSR 4]

CMCOB 2.1.6G

1CMCOB 2.2 sets out further rules and guidance in relation to generating, obtaining, and passing on leads.

CMCOB 2.1.7R

1A firm must not make or pursue a claim on behalf of a customer, or advise a customer to make or pursue a claim, if the firm knows or has reasonable grounds to suspect that the claim:

  1. (1)

    does not have a good arguable base; or

  2. (2)

    is fraudulent; or

  3. (3)

    is frivolous or vexatious.

CMCOB 2.1.8G
  1. (1)

    1A firm should take all reasonable steps to investigate the existence and merits of each element of a potential claim before making or pursuing the claim or advising the customer themselves to make or pursue the claim.

    [Note: CAPR GR 2(a)]

  2. (2)

    In accordance with Principle 1 (Integrity) and Principle 2 (Skill, care and diligence), the firm’s investigations should be such that it is able, in presenting a claim, to make representations which:

    1. (a)

      substantiate the basis of the claim;

    2. (b)

      relate to the nature of the claim and are specific to the claim; and

    3. (c)

      are not false or misleading, or an exaggeration-

  3. (3)

    In complying with CMCOB 2.1.7R firms should have regard to:

    1. (a)

      relevant guidance, including about their decisions, published by the Financial Ombudsman Service, any other relevant statutory ombudsman, or statutory compensation scheme; and

    2. (b)

      decisions by the Financial Ombudsman Service, or any other relevant statutory ombudsman, or statutory compensation scheme concerning similar claims in respect of which the firm acted for the claimant to whom the decision was addressed.

CMCOB 2.1.9R

1A firm must publish on its website (if it operates a website) the standard terms and conditions of the contracts it enters into with customers.

[Note: CAPR CSR 11]

CMCOB 2.1.10R

1A firm must not take any payment from a customer until the customer has signed an agreement with the firm which provides for such a payment to be made.

[Note: CAPR CSR 11]

CMCOB 2.1.11G
  1. (1)

    1CMCOB 2.1.10R prohibits a firm from taking a payment from a customer before the customer has signed an agreement with the firm. It is not sufficient for the firm to enter into an agreement with the customer orally for this purpose: the agreement should be signed.

  2. (2)

    The signature should be on a hard copy of the agreement which may be given or posted to the firm, else sent by fax, or scanned or photographed and sent electronically. Alternatively, the customer could insert a digital image of their handwritten signature into an electronic copy of the agreement before returning the agreement to the firm by email.

  3. (3)

    The FCA would not view an agreement as having been signed for the purposes of CMCOB 2.1.10R where the customer does no more to indicate their acceptance of the firm’s terms and conditions than to send a text message or email or to tick a box on a website or web-based form.

  4. (4)

    The firm will also need to have complied with the requirements of CMCOB 4 (Pre-contractual requirements), including the requirement to take reasonable steps to ensure that the customer understands the agreement (see CMCOB 4.3.1R(3)). Where an agreement is entered into electronically, those steps should include the firm satisfying itself that the customer has had the opportunity to familiarise themselves with the contract.

CMCOB 2.1.12R
  1. (1)

    1This rule applies in respect of an agreement entered into between the customer and the firm under which the firm is to provide claims management services.

  2. (2)

    The firm must:

    1. (a)

      allow the customer to cancel the agreement during a period of 14 days beginning on the day that the agreement is entered into; and

    2. (b)

      permit the customer to terminate the agreement at any time after that period.

  3. (3)

    Where the customer cancels an agreement under (2)(a), the firm must provide the customer with a refund of any payments made to the firm.

  4. (4)

    Where the customer terminates an agreement as in (2)(b), the firm must not charge the customer an amount in excess of what is reasonable in the circumstances and reflects the work undertaken by the firm.

  5. (5)

    This rule:

    1. (a)

      does not apply if regulation 8 (Terms and conditions of termination in an employment matter) of the Damages-Based Regulations 2013, or any equivalent provision made under the law of Scotland, applies; and

    2. (b)

      is subject to:

      1. (i)

        CMCOB 2.1.13R and CMCOB 2.1.14R; and

      2. (ii)

        the claims management fee cap (see CMCOB 5).

[Note: CAPR CSR 17 and 18]

CMCOB 2.1.13R
  1. (1)

    1A firm must not charge a fee to a customer in relation to a financial services or financial product claim before the provision of a claims management service to the customer other than seeking out, referrals and identification of claims or potential claims. [Note: CAPR CSR 15]

  2. (2)

    This rule is subject to CMCOB 2.1.14R.

CMCOB 2.1.14R
  1. (1)

    1A firm must not charge a fee to a customer in relation to a claim in respect of a payment protection contract prior to the later of:

    1. (a)

      the customer withdrawing or deciding not to pursue the claim; and

    2. (b)

      the settlement of the claim.

  2. (2)

    A firm must not charge a fee to a customer in relation to a claim in respect of a payment protection contract if there was no such contract between the customer and the person whom it was alleged was the counterparty to the contract.

[Note: CAPR CSR 15 and 16]