Pleas from claims management companies have convinced the Ministry of Justice not to increase regulation fees this year.
A consultation response published today by the Claims Management Regulator, run by the MoJ, confirmed fees for 2016/17 will remain at current levels.
Six individual companies and a representative body, the Professional Financial Claims Association, had argued they were already experiencing reduced annual turnover, contraction in the market, and extra costs of being part of the Legal Ombudsman scheme.
The MoJ response said the claims market ‘continues to evolve’ and changes to the regulatory landscape have to be taken into account when considering the fee level.
Having considered the responses from CMCs and the ‘general stabilisation’ of the market, the regulator opted to keep the fees as they are.
The MoJ rejected calls to reduce them, as continuing resources are needed to help consumers harmed by a ‘relatively small’ number of companies whose actions have a disproportionate effect.
‘A contracting market does not necessarily result in a corresponding reduction in regulatory costs.’
The application fee for authorisation will remain at £2,000. Fees are incrementally increased based on companies’ turnover, with those bringing in between £75,000 and £88,889 paying £800 a year.
Above that threshold, a levy is charged, set at 0.9% of annual turnover up to £1m, 0.8% of turnover up to £5m and 0.75% of turnover over £5m. Fees are still to be capped at £150,000.
The MoJ's fundamental review of CMC regulation, commissioned alongside the Treasury, will report in ‘early 2016’ on the powers and resources required for a strengthened regime. The full effect of that review is likely to be seen in the 2017/18 financial year.