CMCOB 6.1 Keeping the customer and others informed

Application

CMCOB 6.1.1 R

Enquiries regarding outstanding liabilities

CMCOB 6.1.2 R
  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 6.1.3 G
  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 6.1.4 R
  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 6.1.5 R
  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’sclaim; 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 6.1.6 G
  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 6.1.7 R

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 6.1.8 G
  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 6.1.9 R
  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 6.1.10 G
  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 6.1.11 R

1 CMCOB 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 6.1.12 R
  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 6.1.13 R
  1. (1)

    1If a customer’sclaim 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 6.1.14 G
  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.

CMCOB 6.2 Fees and fee collection

Explanation of fees and charges

CMCOB 6.2.1 R
  1. (1)

    1A firm must provide the customer with an itemised bill, in a durable medium:

    1. (a)

      if the agreement is terminated under CMCOB 2.1.12R(2)(b), before the firm takes any payment (for example, using payment details provided by the customer); or

    2. (b)

      before the firm takes or deducts its fees and charges from money received from a third party for onward transmission to the customer; or

    3. (c)

      when the firm presents an invoice or request for payment to the customer.

  2. (2)

    The itemised bill must explain:

    1. (a)

      what claims management services the firm has provided; and

    2. (b)

      how the fees and charges have been calculated including, where relevant, by reference to the full amount of any money recovered for the customer in respect of damages or compensation, or in settlement of the claim.

  3. (3)

    A firm must not take or deduct its fees and charges from money received from a third party for onward transmission to the customer without the customer’s consent.

CMCOB 6.2.2 G

1 Firms are reminded that they may be carrying on a credit-related regulated activity if they permit customers to enter into instalment plans or give them an extended period of time to pay fees and charges later than the date on which they are payable (see PERG 2.7.19AG and 2.7.19GG).

Fee collection

CMCOB 6.2.3 R

1A firm must establish and implement clear, effective and appropriate policies and procedures for:

  1. (1)

    dealing with customers who are unable to pay fees and charges to the firm when they fall due; and

  2. (2)

    the fair and appropriate treatment of customers in (1) whom the firm understands or reasonably suspects to be vulnerable.

CMCOB 6.2.4 R
  1. (1)

    1If a customer is unable to pay fees and charges to the firm when they fall due, a firm must:

    1. (a)

      treat the customer with forbearance and due consideration, including by allowing the customer a reasonable opportunity to pay the fee and charges; and

    2. (b)

      where appropriate, direct the customer to sources of free and independent debt advice.

  2. (2)

    A firm must not impose charges on a customer who is unable to pay fees and charges to the firm when they fall due unless the charges are no higher than necessary to cover the reasonable costs of the firm.

CMCOB 6.2.5 G
  1. (1)

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

  2. (2)

    In developing procedures and policies for dealing with customers who may not have the mental capacity to make financial decisions, firms may wish to have regard to the principles outlined in the Money Advice Liaison Group (MALG) Guidelines “Good Practice Awareness Guidelines for Consumers with Mental Health Problems and Debt” (March 2015).

    [Note: see http://malg.org.uk/resouces/malg-mental-health-and-debt-guidelines/]

  3. (3)

    A firm should suspend the pursuit of the recovery of fees and charges from a customer who is unable to pay those fees and charges when they fall due, when:

    1. (a)

      the firm has been notified that the customer might not have the mental capacity to make relevant financial decisions and/or to engage at the time in the process for recovery of unpaid fees and charges; or

    2. (b)

      the firm understands or ought reasonably to be aware that the customer might not have the mental capacity to make relevant financial decisions and/or to engage at the time in the process for recovery of unpaid fees and charges.

CMCOB 6.2.6 R

1A firm must not take or deduct its fees and charges from money received from a third party for onward transmission to the customer unless it has written consent from the customer to do so, whether given in the firm’s agreement with the customer or by some other means.

CMCOB 6.3 Ceasing regulated claims management activities

Who and when?

CMCOB 6.3.1 R
  1. (1)

    1CMCOB 6.3.3R to 6.3.6R apply to a firm:

    1. (a)

      which carries on any regulated claims management activities other than seeking out, referrals and identification of claims or potential claims; and

    2. (b)

      in respect of which it has been determined that the firm is to cease carrying on any of those regulated claims management activities.

  2. (2)

    CMCOB 6.3.7R applies to a firm:

    1. (a)

      which carries on seeking out, referrals and identification of claims or potential claims; and

    2. (b)

      in respect of which it has been determined that the firm is to cease carrying on that regulated activity.

  3. (3)

    The following provisions in CMCOB 6.3 apply to a firm with a claims management temporary permission as modified below:

    1. (a)

      the reference in CMCOB 6.3.3R(1) to 20 business days will apply provided that the period does not exceed 30 days;

    2. (b)

      the reference in CMCOB 6.3.5R to 40 business days must be read as 30 days; and

    3. (c)

      the reference in CMCOB 6.3.7(1) to 20 business days will apply provided that the period does not exceed 30 days.

CMCOB 6.3.2 G

1Circumstances of it being determined that a firm is to cease carrying on a regulated claims management activity would include:

  1. (1)

    the governing body of the firm deciding to cease carrying on that activity;

  2. (2)

    the firm becoming insolvent or insolvency proceedings being commenced in respect of the firm; and

  3. (3)

    the FCA issuing a written notice under the Act or final notice removing or suspending the relevant permission.

Notifying customers

CMCOB 6.3.3 R
  1. (1)

    1Within 20 business days of it being determined that the firm is to cease carrying on any regulated claims management activities, the firm must, in a durable medium:

    1. (a)

      notify each customer in relation to whom it carries on those activities that it is to cease carrying on the relevant activities;

    2. (b)

      explain to each customer what options are available for the customer to continue with their claim; and

    3. (c)

      notify each third party to whom the claim has been presented and (if different) each third party against which the claim has been made:

      1. (i)

        that the firm is to cease carrying on those regulated claims management activities; and

      2. (ii)

        of the identity of the person who will act for the customer in place of the firm (where the identity of that person is known).

  2. (2)

    In explaining to the customer what options are available to them to continue with their claim, the firm must include a statement to the effect of:

    1. (a)

      the statement in (3), 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; and

    2. (b)

      the statement in (4), if the firm is aware that the person against whom the claim is being or is 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 (a)).

  3. (3)

    The statement in this paragraph is 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 a statutory compensation scheme.

  4. (4)

    The statement in this paragraph is that it is possible for the customer to present the claim themselves to the alternative dispute resolution mechanism mentioned in (3)(b).

CMCOB 6.3.4 G

1The guidance at CMCOB 3.2.8G also applies in respect of CMCOB 6.3.3R(2)(a).

Sending information and documents to customers

CMCOB 6.3.5 R

1Within 40 business days of it being determined that the firm is to cease carrying on any regulated claims management activities, the firm must send to each customer whose claim has not been settled, withdrawn or discontinued all information and documentation the firm holds relating to their claim.

Passing customer details to third parties

CMCOB 6.3.6 R

1If the firm passes the customer, or details of the customer or of the claim to a third party, with a view to that third party carrying on a regulated claims management activity in respect of the claim or the customer (or activity which would constitute such a regulated activity but for an exemption or an exclusion), the firm must promptly notify the customer in a durable medium:

  1. (1)

    that it has done so; and

  2. (2)

    of the identity and contact details of the third party.

Ceasing to carry on seeking out, referrals and identification of claims or potential claims

CMCOB 6.3.7 R
  1. (1)

    1This rule applies in respect of a firm which has indicated to a customer that it will:

    1. (a)

      identify a third party to assist the customer with their claim; and

    2. (b)

      pass the customer’s details or details relating to the claim to the third party, or pass details of the third party to the customer,

    but has not yet done so and will not do so within 20 business days of it being determined that the firm is to cease carrying on seeking out, referrals and identification of claims or potential claims.

  2. (2)

    Within the time period referred to in (1), the firm must, in respect of each customer to whom it has made an indication of the sort described in (1) in a durable medium, notify the customer that it has not done so and explain why.