First fine issued against rogue claims management company
- Ministry of Justice
- Part of:
- Claims Management Regulator press releases and news stories
- 5 August 2015
A firm responsible for bombarding people with millions of nuisance calls has become the first to be fined under new claims management regulation powers.
Claims management company The Hearing Clinic has been fined £220,000 by the Claims Management Regulator following hundreds of complaints from members of the public who have received speculative calls about claims for Noise Induced Hearing Loss. Many of those called had subscribed to the Telephone Preference Service (TPS), which indicates that they did not want to receive such calls.
The fine is the first to be issued by the Claims Management Regulator, based at the Ministry of Justice, since the government changed the law in December 2014 to introduce the fining power. Firms found breaching the regulator’s rules of conduct now face fines of up to 20% of their annual turnover, as well as having their trading licence suspended or removed.
New figures also show that 296 claims firms received warnings from the regulator in 2014 to 2015 and 105 had their licences removed. The total number of companies in the industry has fallen by 300 this year, to 1,752 (from a peak of 3,367 in 2011).
Further investigations by the Claims Management Regulator are ongoing which could lead to sanctions, including fines.
Additional conditions have also been imposed on The Hearing Clinic, including restrictions around calling numbers registered on the TPS and using data from third-party companies. The Hearing Clinic could face further sanctions including suspension and, where necessary, closure if they break the rules again.
Claims Management Regulator Kevin Rousell said:
The new fines mean we have greater powers to crack down on claims management companies that make nuisance calls.
Companies should be in no doubt that if they break the rules then we won’t hesitate to fine them in addition to the tough action we already take.
The new penalties are the latest in a series of moves by the government to rid the industry of bad firms, which already includes banning firms from taking fees from customers before a contract has been signed and naming firms which are subject to enforcement action or under investigation.
Justice Minister Lord Faulks QC added:
The Government has taken action to help people who are having their time wasted by the unscrupulous practices of some claims firms out to make themselves a profit at others’ expense.
The new fines we introduced mean that companies who break the rules will pay the price.
Other changes have included creating new conduct rules to help tackle abuses in the financial claims sector, while existing requirements have been strengthened to ensure that claims are properly substantiated – and any leads firms receive through telemarketing are legally obtained.
In April 2013, a ban was introduced on referral fees in personal injury cases. The latest figures show that the number of claims firms registered to handle personal injury claims has fallen from around 2,300 at the start of 2013, to 959 at the end of July 2015.
From January 2015 complaints about claims management companies providing poor service to customers have been handled by the Legal Ombudsman meaning the public can get proper redress.
In response to ongoing concerns about the number and cost of Noise Induced Hearing Loss claims, the Civil Justice Council has been asked to consider the issue and to make recommendations.
Notes to editors
- View details of the decision against The Hearing Clinic.
- View the full Claims management Regulation annual report.
- Information about the Claims Management Regulation Unit, including details of live investigations and enforcement action against companies
- For further information on unsolicited marketing calls and SMS texts please visit the Information Commissioner’s Office website.
- Around 1,700 CMCs are licensed to provide claims management services, with around 1,000 licensed for personal injury and 900 for financial claims (some operate in more than one sector).
- Further information on the Legal Ombudsman
Published: 5 August 2015