Consumers will be able to check if claims management companies (CMCs) are subject to investigation with the launch of a new online tool.
Anyone thinking of using a CMC to help with a claim can now log on to this page on the Justice website and for the first time see exactly what rules the CMCs have breached and the reasons behind the action taken. From minor offences and warnings through to suspensions and cancellations the Regulator’s online tool will be updated as and when the action is taken, meaning consumers will have all the latest information they need before deciding on which CMC to use.
Head of Claims Management Regulation, Kevin Rousell said:
‘Consumers can sometimes unknowingly sign-up to a CMC that may be under investigation by my Unit.
‘By creating an online list that names CMCs that are being investigated it will ensure consumers know exactly what action is being taken and the reason for it. It will also give consumers peace of mind that their complaints are being acted upon.
‘By publishing all enforcement action it will send a clear message to the industry that we will not tolerate firms that break the rules.
‘This is part of ongoing work to drive malpractice out of the industry and improve the reputation for the vast majority of CMCs that do follow the rules.’
The Claims Management Regulator is responsible for overseeing businesses which handle compensation claims for customers – for example personal injury and financial products/services (such as mis-sold payment protection insurance). Businesses providing these services are known as claims management companies.
The Regulator has already banned over 100 PPI CMCs and warned a further 149 for poor practice as complaints continue to be made against PPI CMCs. Last year over 10,000 complaints were made to the Regulator, who found the main causes for consumer concern were: misleading marketing, high-pressure selling, poor complaints systems and unclear fees.
As part of the industry wide crackdown, the Regulator has also banned inducement advertising by CMCs. No longer will companies be able to target consumers through advertisements which offer vulnerable individuals a cash incentive for signing up to use their services.
Coming into force this summer is a range of tough new Conduct Rules. This includes bringing an end to all verbal contract arrangements between consumers and CMCs and enforcing written contracts before any fee can be taken. The Regulator is focused on improving consumer protection and ensuring all CMCs are complying with the rules. The claims management industry is continuously evolving and the rules must be constantly monitored.
Around 2,600 claims management companies (“CMCs”) are licensed to provide claims management services, with around 1,700 licensed for personal injury and 1,150 for financial claims; (some operate in more than one sector).
Since regulation began in 2007, the licences of over 900 CMCs have been removed across sectors and others have exited the industry after the commencement of enforcement action.
Notes to editors:
- For further information please call the Ministry of Justice press office on 020 3334 3536.
- CMCs that have had enforcement action taken against them will be named online from today 07/06/13, while those CMCs currently subject to investigation will start appearing online from 13/06/13.
- Further information about the Claims Management Regulation unit can be found here on the Justice website.
- To view the CMR annual report 2011/12 go to the Justice website.
- The 2012/13 annual report will be published on 23 July 2013.
- For further information on unsolicited marketing calls and SMS texts please visit the Information Commissioner’s Office (ICO) website.