Claims management companies (CMCs) will need to provide information about any relevant connections to failed firms that they may have going back six years, the UK's Financial Conduct Authority (FCA) chief executive Nikhil Rathi has confirmed.

This was Rathi's response to the Financial Services Panel's concerns that the regulator's proposed ban on individuals from failed financial services ‘phoenixing' is not retrospective.

"We have defined what we mean by relevant connections in our rules," he said. "Therefore, any CMCs with pre-existing relevant connections will be prevented from managing new claims associated with those connections."

He added: "Having this information will help us to supervise and enforce the rules and applying the ban to new contracts will ensure customers have appropriate protection in the long term."

Earlier this year the FCA published rules prohibiting CMCs from acting in Financial Services Compensation Scheme (FSCS) cases where the CMCs have "relevant connections" to the claims.

The rules came into effect from 7 July 2022, aiming to stamp out CMC phoenixing within two years of that date, it said.

Consumer Duty communications

In the FCA's response to the Financial Services Panel queries regarding Consumer Duty in its 2021/22 annual report, Rathi said the FCA is also working closely with the industry to ensure it understands the FCA's expectations.

He confirmed its sector-based webinars on Consumer Duty for the industry had reached over 10,000 individuals as of 3 November.

He also added that the FCA has planned "extensive external engagement" during the implementation period.

"This includes the series of sector-based webinars for industry. We expect to reach additional stakeholders with further promotion of the webinar content, which is available on demand on our website."

Rathi said that in line with the [anel's suggestions, the FCA has strengthened its governance and accountability requirements, including guidance that firms should have a ‘Duty champion' at board (or equivalent governing body) level and guidance setting out the type of questions it would expect the champion and chair to use to guide discussions by the firm's board.

"We have also strengthened our redress requirements, so firms that cause harm must take action to rectify the situation," he said.