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Status: You are viewing the version of the handbook as on 2019-12-18.

CMCOB 6.1 Keeping the customer and others informed

Application

CMCOB 6.1.1R

Enquiries regarding outstanding liabilities

CMCOB 6.1.2R
  1. (1)

    1After a firm has entered into an agreement with a customer relating to regulated claims management activity, the firm must promptly ask the person against whom the claim is to be made whether the customer has any outstanding liabilities with that person, which the damages, compensation or settlement monies might be off-set against.

  2. (2)

    If the person against whom the claim is to be made confirms that the customer has such liabilities with it, the firm must:

    1. (a)

      in a durable medium, promptly inform the customer of this;

    2. (b)

      inform the customer that they will, where necessary, need to pay the firm’s fees from their own funds.

CMCOB 6.1.3G
  1. (1)

    1The guidance at CMCOB 4.2.10G also applies in relation to CMCOB 6.1.2R.

  2. (2)

    A firm should comply with CMCOB 6.1.2R(1) at the first opportunity it has, for example at the time of sending a letter of authority or initial information request to the person against whom the claim is to be made.

Passing on information and requests for information

CMCOB 6.1.4R
  1. (1)

    1The firm must pass on to the customer:

    1. (a)

      any information received from a third party which is addressed to, or meant for, the attention of that customer; and

    2. (b)

      any request received by the firm from a third party for the supply of information by the customer that the firm does not already hold.

  2. (2)

    The firm must pass on the information or request:

    1. (a)

      promptly, and in any event within ten business days of receiving the information or request; and

    2. (b)

      in a durable medium.

CMCOB 6.1.5R
  1. (1)

    1A firm must notify the customer of:

    1. (a)

      the firm becoming aware of:

      1. (i)

        any costs that the customer may have to meet which the firm has not previously notified to the customer; or

      2. (ii)

        where the firm has notified the customer of the amount of any costs, any change to those costs (including any changes to the firm’s fees); and

    2. (b)

      any material development in the progress of the customer’s claim; and

    3. (c)

      if the firm becomes aware that the person against whom the claim is being or to be made is a member of, or subject to, an alternative dispute resolution scheme (other than an ombudsman or a scheme of a sort mentioned in CMCOB 4.2.2R(2)(g)), the fact that it is possible for the customer to present the claim themselves to that alternative dispute resolution scheme; and

    4. (d)

      any actions the firm intends to take to present and pursue the claim that were not notified to the customer under CMCOB 4.2.8R (1)(c) at the time of contracting; and

    5. (e)

      any allegation by a third party that the claim is fraudulent, except where there is a legal obligation preventing such disclosure. Where a firm is required to make such a notification under this provision, the firm must also advise its customer of the consequences of pursuing a fraudulent claim. Firms are reminded of their obligations under CMCOB 2.1.7R(2).

  2. (2)

    The firm must make a notification in (1):

    1. (a)

      promptly, and in any event within ten business days of an event listed in (1) occurring; and

    2. (b)

      in a durable medium, except for (1)(d), which may alternatively be made over the telephone.

  3. (3)

    Where a firm notifies the customer of any costs or changes to costs in accordance with (1)(a), the firm must obtain and record the customer’s consent in relation to those costs before it invoices the customer for them.

  4. (4)

    The firm must obtain consent for any actions it proposes to take that:

    1. (a)

      have not previously been notified to the customer; or

    2. (b)

      were notified to the customer more than six months ago and are significant in nature.

  5. (5)

    For the purposes of (4)(b), examples of actions that are significant in nature include, but are not limited to, the firm proposing to:

    1. (a)

      commence legal proceedings; or

    2. (b)

      submit a claim to a statutory ombudsman, a statutory compensation, or alternative dispute resolution scheme.

  6. (6)

    A firm must obtain the customer’s consent in (3) and (4):

    1. (a)

      over the telephone; or

    2. (b)

      in a durable medium.

CMCOB 6.1.6G
  1. (1)

    1Examples of developments in the progress of the claim which should be treated as material for the purposes of CMCOB 6.1.5R(1)(b) include:

    1. (a)

      the firm becoming aware of the timetable for any court proceedings or alternative dispute resolution schemes (such as the Financial Ombudsman Scheme), or of any changes to that timetable;

    2. (b)

      the firm receiving any information relating to the claim which is likely to have an effect on the amount of time within which the firm expects the claim to be determined;

    3. (c)

      the firm becoming aware of any information relating to the claim which is likely to have an effect on the prospects of the claim succeeding;

    4. (d)

      the firm receiving an offer of any kind from the person against whom the claim is being made to settle the claim, whether for money or some other non-monetary benefit, even where such an offer was not originally the intended outcome of the claim; and

    5. (e)

      the firm receiving a decision in respect of the claim from a statutory ombudsman, a statutory compensation, or alternative dispute resolution scheme.

  2. (2)

    When making a notification in accordance with CMCOB 6.1.5R (1)(b), a firm should consider whether it is necessary to inform the customer that:

    1. (a)

      updates from the firm are likely to be less frequent while the progress of the claim is not within the firm’s control; and

    2. (b)

      the customer may contact the firm at any time to discuss their claim and its progress.

Revised fee estimates

CMCOB 6.1.7R

1When the firm has sufficient information from which it may reasonably estimate what its fee will be, or that the fee payable by the customer will differ from the illustration or estimate provided under CMCOB 4.2.5R or a previous estimate provided under this rule, the firm must promptly provide the customer, in a durable medium, with:

  1. (1)

    an estimate of the fee; and

  2. (2)

    an explanation of why that estimate differs from the illustration or the estimate (if any) which the firm has most recently provided.

CMCOB 6.1.8G
  1. (1)

    1CMCOB 6.1.7R requires a firm to give a customer updated fee estimates. For example, a firm is likely to have sufficient information to produce a revised estimate once:

    1. (a)

      it knows how much compensation the customer is claiming in relation to a missold financial product (for example because it has obtained the relevant credit agreement) where the fee is a percentage of that sum; or

    2. (b)

      it realises that its fee, if charged by reference to an hourly rate, is likely to differ from its original estimate.

  2. (2)

    When calculating the likely compensation, damages or redress to provide the revised fee estimate under CMCOB 6.1.7R, a firm should include in their calculation any interest or other sum likely to be paid in satisfaction of the claim on which the firm’s fees will be based.

  3. (3)

    If the firm realises that a revised estimate is incorrect, it should provide a further revised estimate.

  4. (4)

    When giving a revised fee estimate as required by CMCOB 6.1.7R the firm:

    1. (a)

      should, where relevant, communicate to the customer any assumptions it has used in its calculations, for example that the customer made all of the payments they were obliged to make under the agreement; and

    2. (b)

      may, where appropriate, include a statement to the effect that the fee estimate may be subject to change and may be different to the actual amount the customer will receive.

  5. (5)

    For claims concerning pension or investment products or services, firms are expected to:

    1. (a)

      take all reasonable steps to obtain sufficient information about the claim as soon as reasonably practicable after entering into an agreement with the customer to provide regulated claims management activity, enabling them to comply with CMCOB 6.1.7R promptly; and

    2. (b)

      where such information is unavailable, consider whether, based on experience of similar claims, the firm is in any case able to give the customer a more reliable indication of the fee that the customer is likely to pay.

Keeping the customer informed

CMCOB 6.1.9R
  1. (1)

    1A firm must provide each customer with an update on the progress of the claim at least once every six months, in a durable medium.

  2. (2)

    But the firm need not provide an update under (1) if, in the previous six months, the firm has:

    1. (a)

      as part of a notification required under CMCOB 6.1.5R(1), given an update on the progress of the claim; and

    2. (b)

      the notification contains sufficient information as to constitute an update for the purposes of (1).

  3. (3)

    An update under (1) must:

    1. (a)

      summarise the progress of the claim since the last report (or, in the case of the first report, since the firm entered into an agreement with the customer in relation to the claim); and

    2. (b)

      indicate the current state of affairs in relation to the claim; for example, whether the firm is awaiting an expert’s report, whether solicitors have issued a letter before action, or whether the claim has been submitted to the Financial Ombudsman Service but it is yet to make a determination.

CMCOB 6.1.10G
  1. (1)

    1If, during the period to which the report relates, the firm has not sent any notifications to the customer under CMCOB 6.1.5R, the update should indicate why, to the best of the firm’s knowledge, there have been no material developments.

  2. (2)

    The firm should give updates under CMCOB 6.1.9R until such time as the claim is finally determined or settled, or is withdrawn or discontinued.

  3. (3)

    If, for the purposes of notifications under CMCOB 6.1.5R(1) and updates under CMCOB 6.1.9R, the firm has made available an online portal through which customers may receive such notifications and updates, the firm should ensure that it alerts the customer to the notification or update being available via the portal, for example by sending a text message or email (and provided that the customer is content to, and is able to, receive such communications).

CMCOB 6.1.11R

1CMCOB 6.1.9R does not apply if the customer expressly requests not to receive such updates.

Providing information to persons other than the customer

CMCOB 6.1.12R
  1. (1)

    1A firm must pass on to a third party any information received from a customer and intended for that third party:

    1. (a)

      promptly, and in any event within ten business days; and

    2. (b)

      in a durable medium.

  2. (2)

    Where the information received from the customer is incomplete for the third party’s purposes, the firm need not comply with (1) until such time as the customer has supplied the outstanding information, provided that the delay caused by waiting for the outstanding information does not, and could reasonably be expected not to, harm, prejudice or invalidate the claim.

Advising the customer where the claim is not successful

CMCOB 6.1.13R
  1. (1)

    1If a customer’s claim is not successful, the firm must advise the customer of the available methods by which the customer may continue to pursue their claim.

  2. (2)

    If the claim is of a sort which may be made by the customer to a statutory ombudsman or a statutory compensation scheme, without using the services of the firm and without incurring a fee, the advice must include a statement to the effect that:

    1. (a)

      the customer is not required to use the services of a firm which carries on regulated claims management activity to pursue their claim; and

    2. (b)

      it is possible for the customer to present the claim themselves for free, either to the person against whom they wish to complain or to the statutory ombudsman or the statutory compensation scheme.

  3. (3)

    If the firm is aware that the person against whom the claim was made is a member of, or subject to, an alternative dispute resolution scheme (other than an ombudsman or a scheme of a sort mentioned in (2)), the advice must also include a statement to the effect that it is possible for the customer to present the claim themselves to that alternative dispute resolution scheme.

  4. (4)

    For the purposes of this rule, a claim is not successful if it produces an outcome with which the customer is not satisfied.

CMCOB 6.1.14G
  1. (1)

    1A claim may progress through several stages. For example, it may start as a complaint made against a company, then proceed to an ombudsman scheme or to the courts. The firm must advise the customer, after each stage at which the claim is not successful, about how they might continue with their claim.

  2. (2)

    The guidance at CMCOB 3.2.8G also applies in relation to CMCOB 6.1.13R.