The UK Financial Conduct Authority (FCA) is seeking feedback on proposals to place a cap on fees that claims management companies charge for helping their customers to seek redress.

Presently some UK consumers pay more than 40% of the financial compensation they receive to claims management companies. The FCA plan, if implemented, will limit the fees that can be charged to 15-30%, depending on the redress that has been awarded to a consumer.

The FCA says its plan will apply to all claims where a consumer is awarded monetary compensation, apart from payment protection insurance claims where a 20% fee cap is in place.

“When working well, [claims management companies] can provide useful services for consumers,” Consumers and Competition Executive Director Sheldon Mills said.

“However, consumers can experience harm when they do not understand the nature of the service CMCs provide and where they are charged excessive fees. The proposals we have announced are designed to address this.”

The FCA expects to publish a policy statement after consultation closes on April 21.

Click here for the consultation paper.