Guidance

CMR special bulletin: transferring or ending client relationships

Published 20 March 2015

This guidance was withdrawn on 1 April 2019

This page has been withdrawn because it’s out of date. Responsibility for the regulation of Claims Management Companies has been taken over by the Financial Conduct Authority.

This bulletin is intended to provide advice to claims management companies (CMCs) that are considering ceasing to trade in regulated claims management services or transferring their clients to another CMC. It also applies to CMCs acquiring cases from another CMC and those that change their contact details or are unable to respond to correspondence for another reason.

1. Transferring your clients to another CMC

Being transferred between CMCs can be unsettling for clients, particularly if they have not been properly informed about what is happening and what this means for them. We therefore expect you to keep your clients informed of any changes. You should manage the change effectively in order to minimise disruption to clients and delays with claims in process. As well as keeping your clients informed of changes, it is also important to let us, financial businesses and the Financial Ombudsman Service (the ombudsman) know, as applicable, of your plans and when these will take effect. When you contact the ombudsman about individual cases, you should use the ombudsman’s case reference number.

It is important that both CMCs involved work closely together to ensure that you both comply with the requirement to keep your clients updated and to advise clients when information has been requested from a financial institution or the ombudsman without delay, in accordance with Client Specific Rules 18 and 19 of the Conduct of Authorised Persons Rules 2014.

1.1 Important requirements before transferring clients

If you are considering transferring your clients to another CMC you must complete the transfer before surrendering your authorisation. Before you transfer your clients, you should:

• notify your clients of the intended transfer. If the agreements do not contain an assignment clause you should explain that they can choose to authorise the new CMC to represent them, find an alternative representative or handle their complaints themselves.
• continue to update your clients on the progress of their claim until the transfer takes place in accordance with Client Specific Rule 18.
• advise your clients without delay of any additional requests for information relating to their claim in accordance with Client Specific Rule 19.
• inform us of your intentions to transfer your clients and ensure that you complete all regulated claims management services before surrendering your authorisation.
• let the ombudsman (and financial businesses) know about your plans and give them details of the CMC you intend to transfer your clients to. Send the ombudsman (and financial businesses) a full list of all cases (with case reference numbers) that you have referred to them and may be affected by these plans.
• give the new CMC as much information as possible about the cases you plan to transfer to them. They will be required to complete due diligence on the cases they receive from you in accordance with General Rule 2e. They will also require all information that you hold to enable them to present the case to third parties under the requirements of General Rules 2a and 2b.

2. Obtaining clients and cases from another CMC

Where you intend to take over or merge with another CMC, you should:

• inform those clients about what you intend to do, explain that they can authorise you to represent them if they wish and depending on the circumstances make them aware that they don’t have to instruct you. Where the cases are properly assigned to you under the terms of the original agreement, you must notify affected clients and also inform them of their options including the consequences of cancelling the agreement.
• obtain new letters of authority from those clients who want you to represent them and send copies to the ombudsman and financial businesses. If you are signing a new contract with these clients you must comply with the requirements under the Client Specific Rules that relate to contracting with clients.
• do this promptly and keep the ombudsman and financial businesses up-to-date to ensure that you are able to update your clients about their claim and advise them of any offers or additional information that they may require. If the ombudsman doesn’t receive responses to requests in a reasonable time, they will contact consumers directly.
• let the ombudsman know about your plans and give them full details of all of the cases you expect to acquire.
• complete due diligence on how the cases were obtained, ensure that you are aware of the progress of the intended claims and that you hold sufficient information to continue the representation of the claim to third parties.

The Legal Ombudsman may consider complaints against you even if they relate to the previous CMC - for further information see their scheme rules section 2.10. You should therefore still ensure that you respond to any complaint from those acquired clients in accordance with the Complaints Handling Rules 2015.

3. Ending representation of clients without transferring them to another CMC

You may wish to stop acting for clients, but not transfer the cases to another CMC. This may apply if you no longer wish to provide regulated claims management services and plan on surrendering your authorisation or have had your authorisation cancelled. To help your withdrawal of representation go smoothly, you should:

• let your clients know what’s happening and explain that they can handle their complaints themselves or seek another representative.
• let the ombudsman know about your plans and give them full details of all cases you have sent them where you’re no longer going to be the representative.

4. Changes to contact arrangements

If you change your contact details or find that you are unable to respond to contacts for any reason, it’s helpful if you inform all your clients, the ombudsman and relevant financial businesses of your new contact details or tell them how long you will be out of contact and why. Failure to do so is likely to be a breach of Client Specific Rule 18 (in respect to clients) and General Rule 2 (in respect to the ombudsman and financial businesses). You are also required to tell us about changes (General Rule 16a). If the ombudsman is unable to get in touch with you they may contact your clients directly to see if you’re still representing them. Consumers unable to contact you may also make a complaint to the Legal Ombudsman regarding your service once they have made a complaint to you (or attempted to).