Claims management companies will have their fees capped and be under stricter regulation after announcements made in today’s Queen’s Speech.

The Financial Guidance and Claims Bill is designed to establish a new statutory body, accountable to Parliament, with responsibility for coordinating the provision of debt advice, money guidance and pension guidance.

It will transfer the regulation of claims management services to the Financial Conduct Authority, and transfers complaints-handling responsibility to the Financial Ombudsman Service.

That means that the Financial Conduct Authority now has the power to implement a claims management regulatory regime which will include a new power to allow the Financial Conduct Authority to cap the fees that claims management companies charge consumers.

This is an early win for Travel Weekly’s Fight Fake Claims campaign, which is looking to reduce fraudulent holiday sickness claims.

By capping the fees claims management companies can charge, many industry experts believe it will take away the incentive some cowboy firms have to swindle customers into making false or exaggerated claims in relation to holiday sickness.

But the level at which the fees will be capped has not been spelled out, and the government has not yet said whether it will be a figure or a percentage of the damages.

It comes on the same day that Abta launched its own campaign, Stop Sickness Scams, which is lobbying the government for similar changes and calling on holidaymakers to report companies touting for business by encouraging false or exaggerated claims.

Abta said the announcement was a “move in the right direction” but called for more detail.

A spokeswoman said: “Abta has been working with the claims management regulator, encouraging effective regulation and reporting claims management companies (CMCs) which do not appear to be adhering to the rules.

“We have called for greater transparency in disclosing CMCs’ relationships with law firms and for CMCs to be upfront when dealing with potential claimants, telling them what percentage they will deduct from damages as their fee.

“Capping the fees charged to claimants could be a move in the right direction if it means claimants will receive more of their damages and we will continue to monitor the Government’s proposals as further information becomes available.”

The spokeswoman urged genuine claimants to claim through their operator directly or via Abta’s conciliation scheme, through which claimants get 100% of the damages awarded if their claim is successful.

Jet2holidays welcomed the news. A spokesman said: “The net is tightening on this dishonest and deceitful practice, however we will not relent until the government cracks down on these sickness touts to stop them taking advantage of British holidaymakers.

“These types of fraudulent claims are putting all-inclusive holidays at risk for millions of hardworking British families and can result in serious legal consequences.”

The Financial Guidance and Claims Bill is also designed to ensure a more robust authorisation process for new companies who wish to enter the claims market.

A Thomas Cook spokesman said: “These measures are a step in the right direction and will help to clamp down on the claims management companies that prey on holidaymakers.

“We now need the government to go further and make the necessary changes to include incidents occurring overseas in the fixed cost regime.”

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