PIMFA welcomes Financial Conduct Authority ban on Claims Management ‘phoenxing’

PIMFA, the trade association for the wealth management, investment services and the investment and financial advice industry, welcomes today’s announcement from the Financial Conduct Authority (FCA) that the practice of firms ‘phoenixing’ into claims management companies will be banned from 7 July 2022.

‘Phoenixing’ is a particularly unpleasant practice that sees claims management companies (CMC) created from the ashes of failed financial services firms and then target and handle the claims of their former clients to the Financial Services Compensation Scheme (FSCS) against the now failed firm. PIMFA has long argued that this practice should be stamped out.

Simon Harrington, Head of Public Affairs at PIMFA commented: “We are pleased the FCA has listened to PIMFA’s recommendations and intervened in this market and consider it to be long overdue. As we set out in our paper on FSCS reform, the existence of the FSCS can act as a market distortion especially in instances of firms seeking to phoenix as CMCs once they have defaulted onto the FSCS. Today’s policy statement represents a much-needed closure of this loophole and the FCA should be congratulated on taking action.”