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You are viewing the version of the document as on 2021-11-30.

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  1. Point in time
    2021-11-30

CMCOB 4.3 Pre-contract requirements

CMCOB 4.3.1R

1Before entering into an agreement with the customer that relates to regulated claims management activity, the firm must:

  1. (1)

    take reasonable steps to:

    1. (a)

      ascertain whether the customer has other methods for pursuing the claim, and if so:

      1. (i)

        ensure that the customer understands that those methods are available to them;

      2. (ii)

        seek confirmation in writing from the customer that the customer does not wish to use those methods, and the customer’s reasons for not wishing to do so;

      3. (iii)

        record the customer’s confirmation and reasons; and

    2. (b)

      draw the customer’s attention to the information provided under CMCOB 4.2.2R(2)(g) and (h), if that information is relevant to the claim;

    [Note: in part, CAPR CSR 10]

  2. (2)

    make it clear to the customer that the customer may seek further advice or look for another person to assist the customer with the claim, subject to any time limits within which a claim must be made; and

    [Note: CAPR CSR 13]

  3. (3)

    take reasonable steps to ensure that the customer understands the agreement;

    [Note: in part, CAPR CSR 14

  4. (4)

    ask the customer whether they have outstanding liabilities with the person against whom the claim is to be made and explain that if they do:

    1. (a)

      that any damages, compensation or settlement monies might, in certain circumstances, be off-set against those outstanding liabilities; and

    2. (b)

      the customer will, where necessary, need to pay the firm’s fees from their own funds;

  5. (5)

    in the case of pension related claims explain:

    1. (a)

      that the firm’s fee may become payable before the customer has access to their pension; and

    2. (b)

      that the customer will, where necessary, need to pay the firm’s fees from their own funds;

  6. (6)

    ask the customer if they, whether in Great Britain or in another jurisdiction:

    1. (a)

      have been declared bankrupt;

    2. (b)

      are subject to a bankruptcy petition;

    3. (c)

      are subject to an individual voluntary arrangement;

    4. (d)

      have proposed an individual voluntary arrangement which is yet to be approved or rejected by creditors;

    5. (e)

      are subject to a debt relief order; or

    6. (f)

      have any other similar process or arrangement to those listed in (a) to (e) including but not limited to sequestration; and

    if so, explain that any damages, compensation or settlement monies might, in certain circumstances be off-set against the customer’s outstanding debts; and that the customer will, where necessary, need to pay the firm’s fees from funds that are not subject to the processes or arrangements listed above at (a) to (f).

  7. (7)

    record the customer’s response to questions (4) and (6) and where the customer does not know the answer, advise them to check.

CMCOB 4.3.2G
  1. (1)

    1For the purposes of CMCOB 4.3.1R(1)(a) a firm will have complied with its obligations if it has provided relevant examples of potential alternative methods of pursuing the claim and has asked the customer whether any such methods are available to them.

  2. (2)

    A customer should be treated as having other methods for pursuing a claim for the purposes of CMCOB 4.3.1R(1) if, for example:

    1. (a)

      the claim is for personal injury and the customer has legal expenses cover under a contract of insurance relating to their car or home and that cover includes legal advice, assistance and representation; or

    2. (b)

      the customer is entitled to legal advice, assistance and representation by virtue of their membership of a trade union.

  3. (3)

    Where the customer does have other methods for pursuing a claim, the firm should explore whether the customer has investigated whether they might pursue the claim through those methods (for instance, by using any advice, assistance and representation available under a contract of insurance or through their trade union membership).

  4. (4)

    Where a customer is unable to confirm whether they have other methods for pursuing the claim or is unaware of whether they have suitable cover in place, the firm should advise the customer to check whether they have such cover in place and inform the customer that it is possible to pursue a claim through such alternative arrangements if they are in place.

  5. (5)

    Firms are reminded that DISP 1.2.1R(4) requires firms to provide information to eligible complainants, in a clear, comprehensible and easily accessible way, about the Financial Ombudsman Service (including the Financial Ombudsman Service’s website address):

    1. (a)

      on the firm’s website, where one exists; and

    2. (b)

      if applicable, in the general conditions of the firm’s contract with the eligible complainant.

CMCOB 4.3.3G
  1. (1)

    1The firm may need to take additional steps under CMCOB 4.3.1R(3) to ensure that the customer understands the agreement where the customer is one whom the firm understands or reasonably suspects to be vulnerable.

  2. (2)

    Customers who have mental health difficulties or mental capacity limitations may fall into the category of particularly vulnerable customers.