4.In the Explanatory Memorandum (EM) to this draft Order, HM Treasury (HMT) says that claims management companies (CMCs) are businesses which provide advice or other services in relation to the making of compensation claims. CMCs in England and Wales are currently regulated by the Claims Management Regulation Unit (CMRU), which was established within the Ministry of Justice in April 2007 under the Compensation Act 2006. According to the CMRU, there are currently 1,238 authorised CMCs in operation. A 2015 independent review found that the current regulator lacked sufficient powers and resources to regulate the market and recommended a number of actions to strengthen the regulatory regime, concluding that the Financial Conduct Authority (FCA) would be well-placed to deliver a step change in enforcing the regulation of the sector. The Order proposes the transfer of the regulation of claims management activities from the CMRU to the FCA. It sets out the types of claims management activities that will be regulated by the FCA and the restrictions on the promotion of those activities. It also specifies those activities which will be excluded from regulation by the FCA.
5.The Government consulted on its proposed approach from 23 April to 1 June 2018, and published its response on 27 July. In the EM, HMT says that there were 51 responses, from a range of CMCs, firms in the financial services industry and professional and trade bodies, which were largely supportive of the Government’s proposals on the scope of regulation and the FCA’s consultation requirements. HMT also reports (at paragraph 10.3 in the EM) a number of views suggesting that other sectors be included in the scope of the regime. HMT will consider extending the scope to some of these sectors, such as flight delays and timeshares, but has rejected an extension to credit hire and medical reporting organisations. The FCA is currently consulting on authorisation fees, including one-off application fees and ongoing periodic fees which would vary according to the size of the firm’s turnover, and is expected to make a policy statement on fees in December 2018.
6.International road traffic is governed by a number of Conventions including the 1968 Vienna Convention on Road Traffic (the Convention), which provides for the mutual recognition of driving licences. The Convention allows contracting parties to deny entry to unregistered trailers with a gross weight of more than 750kg. There is currently no registration scheme for UK trailers and, as a result, UK trailers have been subject to “small-scale but persistent” enforcement action in some EU Member States. As the Department for Transport states in the accompanying Impact Assessment, the UK has now ratified the Convention as part of its “preparations for leaving the EU, to ensure readiness in all scenarios” and the Convention will “subsequently become the UK’s legal basis for international road travel with fellow contracting parties” to the Convention. The Convention will come into force in the UK in March 2019.
7.This instrument makes provision for the operation of a new trailer registration scheme for any commercial trailer travelling to or through a Convention country that weighs more than 750kg, or non-commercial trailer that weighs more than 3,500kg (most caravans and single horse trailers are unlikely to require registration). The scheme will be operated on a cost recovery basis by the Driver and Vehicle Licensing Agency. The instrument also sets out the offences for contravening or failing to comply with the Regulations.
8.There are existing international road haulage rules for failing to produce a permit or a Community Licence (for EU transit) for a goods vehicle. In the event of a “no deal” with the EU, the Government have made provision for a permits scheme for international haulage. This Order sets out the financial penalties which will apply to offences under any new permits scheme. The Department for Transport (DfT) has informed the Committee that the financial penalties are the same as those that apply under the existing rules. The Trailer Registration Regulations 2018 (see paragraph 6) introduce a new scheme of trailer registration for UK trailers and include offences for contravention or failure to comply. This Order sets out the financial penalties to be paid under breach of the new registration scheme and the DfT has told us that these mirror the penalties currently applied for motor vehicle registration.
2 ‘Independent review of claims management regulation’: [accessed 23 October 2018].
3 HM Treasury, ‘Claims management regulation: response to the consultation on secondary regulations and policy statement for transitional provisions’: [accessed 23 October 2018].
4 Department for Transport, Impact Assessment: Trailer Registration Regulations 2018 (September 2018) p.7, paragraph 5: [accessed 23 October 2018].
5 Ibid, p.7, paragraph 4.
6 Secondary Legislation Scrutiny Committee (Sub-Committee A), (HL Paper 196).