News story

Tougher rules for claims management companies

This news article was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

The Claims Management Regulator has launched a consultation which proposes to end verbal contract arrangements.

The Claims Management Regulator (CMR) has launched a consultation which proposes, amongst other things, to end verbal contract arrangements between consumers and CMCs and enforcing a written contract before any fee can be taken.

The Rules Review consultation is the next step in the CMR units push to crack down on bad practice by some CMCs.
Three main amendments to the rules include:

  1. CMCs to only be allowed to agree contracts in writing with their clients, before any fees can be taken.

  2. CMCs to be required to inform their clients of any suspension or variation to the business authorisation once in effect.

  3. CMCs to only be allowed to refer to their regulatory status as being regulated by the claims management regulator - rather than the MoJ which till now could be misconstrued as MoJ endorsement.

Head of Claims Management Regulation Kevin Rousell said:
‘I want people to have time to think through their arrangement and be happy and clear about exactly what the deal is before they part with any money.
‘Earlier this month I said the industry will be subjected to radical changes over the next 12 months with tougher rules put in place. I am pleased to announce the next step in our efforts to drive malpractice out of the industry.
‘Time and time again we see examples of consumers who have inadvertently agreed to a contract with a CMC without a written contract in place. We want consumers to be better protected by making the terms of any contract clearer.’
The CMR consultation published on 22 August 2012 on the MoJ website aims to give consumers and industry members an opportunity to shape the proposals. The consultation closes on 3 October 2012.