Corporate report

Claims Management Regulator: enforcement actions July to September 2017

Updated 27 April 2018

1. Live investigations and recent actions

The Claims Management Regulator (CMR) publishes updated information on recent enforcement actions and investigations.

2. Actions: July to September 2017

The regulator uses its powers to take action against authorised claims management companies (CMCs) and individuals who don’t meet the required standards. Between July and September 2017, the regulator took the following action:

Activity	July to September 2017	Total since April 2017
Investigations started into authorised CMCs	8	19
Investigations started into unauthorised CMCs	2	6
Licences cancelled	34	36
Financial penalties issued	1	2
Warnings issued	63	140
Audits conducted	87	192
Visits conducted	47	154

3. PPI and other financial claims

Complaints about mis-sold PPI remain the most active area in the financial claims sector. The CMR continues to prioritise and tackle malpractice in this sector on a risk assessed basis, and in particular where there is a risk of substantial consumer detriment.

The regulator took the following action during this quarter:

• Audited 26 CMCs
• Continued investigations into 14 CMCs
• Issued 11 warnings to CMCs
• Cancelled the authorisation of CDW Bureau Ltd who have subsequently appealed the decision. While this case is being appealed, the cancellation has been stayed by the appeal tribunal.
• Prepared cases to defend the appeals of two CMCs – Harrington Advisory Ltd (cancellation of authorisation) and Help Your Claim Ltd (financial penalty)

4. Personal injury claims

CMR closely monitors CMCs operating in the personal injury market through a programme of audits and visits. The regulator has been targeting CMCs that are operating call centres established as misleading consumers, and identifying suspected fraudulent and other criminal activity.

This quarter the regulator took the following action:

• Audited 42 CMCs and issued advice notices to those that were non-compliant with the referral fee ban, general rules and regulations
• Issued 14 warnings
• Visited 20 CMCs

4.1 Holiday sickness claims

CMR continues to investigate the conduct of regulated CMCs and unauthorised entities in relation to reported increases in holiday sickness claims. The investigation is focused on following compliance priorities to tackle misconduct in this sector, including:

• Addressing misleading marketing
• Monitoring telemarketers who are sourcing and using data legitimately
• Ensuring that the activities of CMCs are not likely to place solicitors in breach of their code
• Dealing with unauthorised activity effectively

Based on media reports and information sharing with the Association of British Travel Agents (ABTA), travel companies are being more robust in challenging potential false and malicious claims. This quarter the CMR has taken the following action:

• Investigated 2 authorised CMCs for alleged rule breaches
• Identified 35 unauthorised businesses, 13 of which have now ceased trading and investigations continue into the other 22 businesses
• Cancelled the authorisation of Allsure Limited for coaching clients into making fraudulent holiday sickness claims
• Removed the websites of 7 CMCs identified as operating illegally
• Continued to work closely with the Solicitors Regulation Authority (SRA) and ABTA members who have provided intelligence, information and evidence about market practices. CMR has also shared intelligence with the SRA about solicitors suspected of malpractice.

4.2 Fraudulent activity

The regulator collects intelligence from different sources on CMCs involved in fraudulent activities. Some of the actions taken by the regulator to disrupt criminal activity this quarter included:

• Working with enforcement partners regarding holiday sickness claims
• Attending Insurance Fraud Bureau (IFB) Forums and working closely with the IFB and partners from the insurance industry to share actionable intelligence
• Attending Government Agency Intelligence Network meetings and responding to referrals from partners in relation to ongoing criminal investigations
• Attending Police Intelligence Forums in order to disrupt organised crime groups, in particular those involving CMCs
• Meeting with stakeholders in relation to an ongoing investigation and agreeing outcomes

5. Nuisance calls and texts

Nuisance calls and texts remain a key compliance priority for CMR. The regulator scrutinises CMCs’ handling of data and leads for direct marketing and participates in multi-agency initiatives to tackle nuisance calls and texts. This includes working closely with the Information Commissioner’s Office (ICO) and other regulators to identify and take action against those companies that engage in non-compliant marketing.

The regulator took the following action this quarter:

• Audited 37 CMCs engaged in direct marketing and issued comprehensive written advice
• Issued 11 warnings to authorised CMCs engaged in non-compliant direct marketing
• Issued a financial penalty of £52,000 to Bluestoneclaims Ltd for making unsolicited telemarketing calls to individuals registered on the Telephone Preference Service without sufficient consent, and conducting insufficient due diligence on data accepted from a third party
• Cancelled the authorisation of Allsure Ltd for providing misleading information during sales calls
• Cancelled the authorisation of MJE Associates (Wales) Ltd due to concerns that the director was not competent to run the business, inadequate due diligence on data used for direct marketing, and submitting generic letters of complaint to financial institutions. This cancellation has been stayed by the appeal tribunal.
• Cancelled the authorisation of UK 4 Legal Ltd for insufficient due diligence and monitoring of a third party agent, and competency concerns
• Varied the authorisation of Creditline Financial Ltd for accepting leads from businesses not authorised to do so despite previous warnings
• Started new investigations into 3 authorised businesses for suspected direct marketing breaches, and progressed formal investigations into a further 19 authorised CMCs
• Participated in Operation LINDEN – a cross-industry working group involving other regulators, consumer groups, trade associations, and industry representatives to share intelligence and co-ordinate activity in relation to nuisance calls and texts
• Continued to work closely with the ICO, Ofcom and the Advertising Standards Authority to assist with investigations

6. Unauthorised trading

The regulator has further intensified its work to tackle unauthorised trading, including restructuring its dedicated team to build further capacity. CMR is working with partner agencies to improve intelligence gathering and detection, and take appropriate action on a risk assessed basis. The regulator is also focused on tackling the unauthorised elements of the holiday sickness claims market.

During the last quarter the CMR received 205 notifications of businesses trading without authorisation, which were all assessed and the following action taken:

• Issued 40 letters of warning to businesses offering claims management services without authorisation
• Started investigations into 2 unauthorised businesses
• Removed the website of 4 unauthorised businesses

Just outside the quarterly reporting period, CMR prosecuted My Life Adviser Ltd on 2 October 2017 for conducting regulated claims management services without authorisation. The company was fined £40,000 for 8 offences under the Compensation Act 2006 and ordered to pay over £40,000 in costs and a victim surcharge of £170.

7. Other news and publications: July to September 2017

• On 16 June 2017 the First-tier Tribunal (General Regulatory Chamber) Claims Management Services upheld in part an appeal made by UKMS Money Solutions Limited against the regulator’s decision to impose a financial penalty of £50,000 for issues in relation to due diligence and ensuring that information provided to consumers was clear, transparent, fair, and not misleading. The appeal was upheld in respect of amending the instalment dates for payment of the financial penalty, as the dates in the regulator’s decision had passed. CMR has addressed issues with direct marketing in the August 2017 bulletin and supplementary guidance.
• Ben Winchester, director of Swansea-based Falcon and Pointer, was fined £175,000 for failing to comply with the Conduct of Authorised Persons Rules by making millions of automated calls. 5,535 complaints about automated direct marketing calls were made to the ICO. As a result, he was also disqualified from being directly or indirectly involved in the promotion, formation or management of a company for six years from 24 July 2017.
• The Claims Management Regulation Annual Report 2016-17 was published in August 2017. The report covers the main developments, achievements and progress made in claims management regulation over the last 12 months and sets out our priorities for the future.
• CMR published a business bulletin in August 2017, which provides information and guidance in relation to direct marketing, Plevin, identifying and protecting vulnerable clients, transfer of business, and the progress of the Financial Guidance and Claims Bill.
• On 13 October, the Government announced a Call for Evidence on tackling issues related to holiday sickness claims. They are seeking responses on how low value personal injury claims are handled more generally (including evidential requirements), with a view to identifying further steps to address the incentives to bring unmeritorious claims, both for holiday sickness and more widely.