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Aipedia: Claims management companies
The FCA has no AI-specific rules for claims firms; it applies the Consumer Duty, record keeping and SM&CR to AI as to anything else. For CMCs that matters because the regulator is now studying the market and the Ombudsman is criticising AI submissions.
Part of: AI in Claims management companies
In short
The FCA says it will not introduce extra regulations for AI. Its 19 October 2026 good-practice page creates no new requirements but says firms remain responsible for consumer outcomes and for AI services they outsource, and asks for SMF ownership and auditable records. The FCA market study of claims management services, launched 19 May 2026, covers professional representatives, lead generators and consumer data, and reports by 18 May 2027. The Ombudsman has separately reported long, inaccurate AI-assisted submissions. None of these sources addresses PI directly.
Four bodies shape how a claims management company (CMC) can use AI. The FCA has regulated claims management activity in Great Britain since 1 April 2019 and writes the conduct rules in CMCOB. The Financial Ombudsman Service decides complaints against CMCs and receives the complaints CMCs bring against financial firms as professional representatives. The SRA regulates law firms acting as professional representatives in high-volume consumer claims, and has worked jointly with the FCA on motor finance. The ICO regulates the personal data that lead generation, DSARs and claim screening rely on.
None of them has issued an AI rulebook for CMCs. What exists is a set of general FCA publications, Ombudsman evidence and data protection law that together define what a regulated claims firm is expected to do.
| Publication | Date | Status | Key point for CMCs |
|---|---|---|---|
| FCA AI Update | April 2024 | Corporate document | Maps AI to the Principles, SYSC, Consumer Duty and SM&CR. |
| AI and the FCA: our approach | 8 Sept 2025, updated 2 Oct 2026 | Policy position | "We do not plan to introduce extra regulations for AI." |
| AI good practice and areas for improvement | 19 Oct 2026, updated 20 Oct 2026 | Good and poor practice, no new requirements | Firms remain responsible for consumer outcomes and for outsourced AI. |
| Claims management market study notice | 19 May 2026 | Statutory market study | Covers professional representatives, lead generators and consumer data. Report by 18 May 2027. |
| FOS response to the Mills Review | 2 April 2026 | Consultation response | Evidence of long, inaccurate AI-assisted submissions. |
| FOS professional representative charges | From 1 April 2025 | Binding case fee | £250 per referral after 10 free cases a year. |
| Data (Use and Access) Act 2025, s.80 | In force 5 Feb 2026 | Law | Safeguards for solely automated significant decisions. |
The FCA's AI approach page relies on existing frameworks and names the Consumer Duty and SM&CR as the key ones. Its 2024 AI Update had already mapped AI to the Principles, SYSC, the Consumer Duty and SM&CR.
The good-practice page published on 19 October 2026 is the most practical statement so far. It says the observations "do not create new requirements", but it sets out what good looks like:
The page covers machine learning, generative AI and agentic AI across financial services and does not single out CMCs. For a claims firm, the read-across is straightforward: an AI voice agent, an eligibility tool or a submission drafter each needs an owner, testing evidence and monitoring.
Many CMCs may buy AI rather than build it. The good-practice page says firms "can outsource AI services, but remain responsible for them". That echoes SYSC 8.1.6R, under which a firm remains fully responsible for its obligations when it outsources, although how far SYSC 8 applies depends on the firm's permissions. Either way, a supplier's error is the firm's regulatory problem. Contract terms, testing rights and audit access with the vendor are the firm's main tools for managing that risk.
The FCA's Market Study Notice of 19 May 2026 covers the supply of claims management services in Great Britain. That includes professional representatives, meaning FCA-authorised CMCs and professionals authorised by legal regulators, and lead generators, including those acquiring, using or selling consumer data. Representations closed on 30 June 2026. The report is due by 18 May 2027, and the FCA may consider a market investigation reference to the Competition and Markets Authority under section 131 of the Enterprise Act 2002.
The notice does not mention AI. But AI-generated adverts, lead scoring and bulk claim processing sit squarely inside the activities being studied, so firms should expect questions about them. See AI lead generation and claims adverts.
In its response to the Mills Review, the FOS reported that up to 35% of responses to initial assessments in a small early sample were likely AI-assisted, and that professional representatives had sent submissions of around 200 pages with multiple inaccuracies in reply to a 6 to 8 page provisional decision. It asked the FCA for clarity on AI records, human escalation and disputes where AI is used on both sides. The Chief Ombudsman later described a case where 37 of 39 references were wrong, as reported in October 2026. Read more in AI-written complaints to the Ombudsman.
SYSC 9.1.1R requires records sufficient for the FCA to monitor compliance. For AI work that means keeping the prompts or inputs, the output, who reviewed it, what they changed and why. The good-practice page adds governance records: the SMF owner for each tool, test results, monitoring data and escalation decisions. Records like these also help when a client or partner firm alleges negligence.
None of these publications says anything about PI. For personal injury CMCs, CMCOB 7.4 compulsory cover still applies in full, with no AI carve-out in the rule. For other CMCs, PI is voluntary and wordings vary. A regulator's interest in AI does not in itself trigger a PI claim, but regulatory investigations can lead to redress, complaints and civil claims. Investigation costs are covered by some policies as an extension (see regulatory investigation costs cover), while fines are usually excluded or uninsurable. Our page on whether AI regulatory fines are insurable explains the limits, and Does claims firm PI cover AI errors? covers the policy position in detail.
Apex arranges PI for claims management companies. A broker can review how your policy treats AI-assisted claim work and regulatory investigations, and help you present your AI governance to insurers. Start with AI in claims management.
No. The FCA says the observations do not create new requirements. They show how the FCA reads existing rules, including the Consumer Duty and SM&CR, so a firm that ignores them may find it harder to show it acted reasonably if consumer harm follows.
Not with the FCA. The good-practice page says firms can outsource AI services but remain responsible for them. A firm may have contractual rights against the supplier, but the regulatory accountability stays with the CMC and its senior managers.
The FCA said it would publish its report by 18 May 2027. Representations on the notice closed on 30 June 2026. The FCA may consider referring the market to the Competition and Markets Authority for a market investigation under the Enterprise Act 2002.
Yes in substance. SYSC 9.1.1R requires orderly records sufficient for the FCA to monitor compliance, and the October 2026 good-practice page asks firms to keep auditable records of AI decisions, rationale, challenge and escalation, with a named senior manager responsible.
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