CMCOB 5.1 Fee cap for payment protection insurance claims

Under section 29(3) of the Financial Guidance and Claims Act 2018, the fee cap applicable to regulated claims management activity in connection with a PPI claim is 20% of the amount recovered. The cap applies by reference to a sum comprising all amounts charged for such services in connection with the claim (whether or not charged under a single agreement), exclusive of VAT.

Section 31 of that Act (PPI claims: interim restriction on charges imposed by authorised persons after transfer of regulation to FCA) prohibits a firm from:

1. (a)

   charging an amount which exceeds the PPI claims management fee cap; and

2. (b)

   entering into an agreement which provides for the payment by a customer of charges which would breach or are capable of breaching the PPI claims management fee cap.

Any payment in excess of the PPI claims management fee cap is recoverable by the customer. The FCA would expect the firm to reimburse the customer promptly, irrespective of whether the customer has asserted that the firm has breached the fee cap.

Any agreement which provides for the payment by a customer of charges which would breach or are capable of breaching the PPI claims management fee cap is not enforceable to the extent that it provides for such a payment.

A firm that breaches the PPI claims management fee cap.is subject to the FCA’s disciplinary powers in the same way as if the firm had breached a rule.