Corporate report

Claims Management Regulator: enforcement actions April to June 2015

Updated 9 May 2016

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1. Live investigations and recent actions

Part of the role of the Claims Management Regulator (CMR) is to ensure that authorised claims management companies (CMCs) have understood and are operating in line with the rules they’ve agreed to follow.

We publish regularly updated information on recent enforcement actions and investigations.

2. Actions: April to June 2015

The regulator uses its powers to take action against authorised CMCs and individuals who don’t meet the required standards.

Between April and June 2015, the regulator took the following action:

  • 21 investigations started
  • 1 licence suspended
  • 1 licence varied with conditions
  • 69 warnings issued
  • 76 audits carried out
  • 272 visits to CMCs

3. PPI and other financial claims handling

The practices of some CMCs specialising in financial claims, particularly mis-sold payment protection insurance (PPI) and mis-sold packaged bank accounts (PBA), continue to concern consumers and the financial services industry.

The regulator took the following action:

4. Nuisance calls and texts

The number of unwanted marketing calls and spam text messages continues to be a serious concern for CMR and other regulators with primary responsibility in this area – the Information Commissioner’s Office (ICO) and Ofcom. The regulator is working closely with these organisations to identify and take action against those companies that break the rules.

The regulator took the following action:

Issued the first financial penalty against a CMC following complaints about nuisance calls.

  • Audited 25 CMCs engaged in direct marketing and issued comprehensive written advice to these businesses
  • Warned 10 CMCs engaged in lead generation. Several of the warnings were issued as a result of some CMCs failing to carry out sufficient due diligence on introducers
  • Identified 6 direct marketing businesses potentially engaged in providing regulated claims management services without authorisation, and are carrying out further investigations into these businesses
  • Continued investigations into 5 CMCs and began new investigations into 4 CMCs potentially believed to be engaged in non-compliant direct marketing
  • Continued to share information and work closely with the ICO to assist with investigations
  • Conducted several mystery shopping exercises
  • Imposed conditions on the licence of the CMC, EMC Advisory Services Ltd in relation to their telemarketing activities. This took place on 2 July 2015, just outside the reporting period

5. Personal injury claims handling

A ban on CMCs, solicitors and insurers paying or receiving referral fees in personal injury cases has been in place since 1 April 2013. Industry regulators have been closely monitoring related activity. CMR is monitoring how CMCs have adapted to the ban through a proactive programme of compliance activities. The regulator took the following action:

  • Audited 31 CMCs
  • Issued 26 warnings
  • Identified and referred 15 unauthorised businesses for investigation to our specialist team which is set up to tackle unauthorised activity
  • Continued to work closely with partners such as the Solicitors Regulation Authority (SRA) and the Financial Conduct Authority (FCA), sharing information and raising issues as they emerge

Since the referral fee ban came into effect in April 2013, we have visited over 900 CMCs and have followed this up with a programme of audits and visits to make sure those CMCs continue to follow the rules. At the start of 2014, around 1,400 CMCs were operating in the personal injury market. This has fallen to 966 at the end of June 2015.

Personal injury fraud remains a continuing concern and a key area of action for the regulator. CMR works with the Insurance Fraud Bureau (IFB) and the City of London Police’s Insurance Fraud Enforcement Department (IFED) to disrupt criminal operations. During this quarter, the regulator continued to collect intelligence from different sources on CMCs involved in other fraudulent activities.

The regulator took the following action to tackle criminal activity:

  • Provided 4 statements to police forces and assisted 3 police forces with ongoing operations
  • Began investigations into 3 CMCs
  • Continued to work with a range of enforcement agencies, including the IFB, IFED, ICO, HM Revenue and Customs, and the SRA to deal with criminality in the personal injury sector and general fraud
  • Provided evidence which assisted in the conviction of the director of a previously authorised CMC. The director was sentenced at Manchester Crown Court for multiple counts of conspiracy to defraud and for failing to disclose county court judgements when applying for authorisation.
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