The Compliance Doctor

FCA Authorisation for Claims Management Companies (CMC)

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FCA Authorisation for CMCs

This podcast reviews key themes and information from three sources regarding FCA authorisation for Claims Management Companies (CMCs) in the UK.

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Apply to become a claims management company | FCA

The source, directly from the FCA website, outlines the application process for becoming a regulated CMC. Key takeaways include:

  • Comprehensive Application Process: Applicants must thoroughly review the "how to apply" page, relevant portfolio letters, and the FCA Handbook. This ensures understanding of FCA expectations, potential risks CMCs pose, and the rules governing their operation.
  • Detailed Supporting Documentation: The application requires a robust regulatory business plan (RBP), financial forecasts, policies, procedures, and other relevant forms. The FCA stresses the importance of detailed information to avoid delays.
  • Transparency and Disclosure: The FCA emphasizes honesty and full disclosure in all application responses. Omitting information is viewed seriously and could indicate dishonesty or lack of integrity.
  • Application Fee: A non-refundable fee applies based on the specific permissions sought.


    • Quote: "If you don't disclose something, we take this very seriously and may consider it to be evidence of dishonesty and/or lack of integrity." This highlights the FCA's commitment to high ethical standards in the claims management sector.


    CMC FCA Authorisation Requirements

    Providing a concise overview of key authorisation requirements, focusing on threshold conditions, the regulatory business plan, the impact of the Senior Managers & Certification Regime (SM&CR), and information on a compliance consultancy.

    • Threshold Conditions: CMCs must demonstrate financial stability, effective governance, competent management, a suitable business model, and ongoing compliance with FCA rules.
    • Regulatory Business Plan (RBP): The RBP is crucial, demonstrating the CMC's viability, operational management, and compliance plans. It should include detailed service descriptions, risk analysis, compliance monitoring controls, and growth projections.
    • Impact of SM&CR: This regime promotes accountability, raises governance standards, and strengthens consumer protection. It has led to positive changes in board responsibilities and compliance training within CMCs.


      • Quote: "The RBP must also clearly articulate the CMC's unique value proposition, target market, and competitive advantage." This emphasises the need for CMCs to demonstrate a clear understanding of their position within the market.


      Financial forecasting in FCA Authorisation Application

      Delving specifically into the financial forecasting element of the application, emphasising its importance and providing practical guidance.

      • Three-Year Forecast: The financial forecast must cover three financial years, including profit and loss, balance sheet, and cash flow projections. It must demonstrate sound operation and adequate resources.
      • Structure and Clarity: The forecast should be well-structured with clear narratives explaining assumptions. A summary must be included in the RBP.
      • Regulatory Concerns: The FCA assesses whether the business can meet capital requirements and remain a going concern. Consistency between written content and financial figures is crucial.
      • Stress Testing: Stress-tested forecasts are mandatory, typically handled by accountants or finance professionals.


        • Overall Themes:

        • Stringent Regulation: The FCA applies a rigorous authorisation process for CMCs, aiming to ensure financial stability, robust governance, consumer protection, and ethical conduct.

        • Transparency and Compliance: Open and honest disclosure is paramount, demonstrating commitment to compliance and high standards of integrity.

        • Detailed Planning and Forecasting: CMCs must provide comprehensive business plans and robust financial forecasts, demonstrating viability and sustainability.

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