Corporate report

Claims Management Regulator: enforcement actions July to September 2015

Updated 9 May 2016

1. Live investigations and recent actions

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

2. Actions: July to September 2015

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

Between July and September 2015, the regulator took the following action:

• 21 investigations started
• 59 licences cancelled
• 1 financial penalty issued. (2 financial penalties were issued just outside the reporting period in October 2015.)
• 43 warnings issued
• 73 audits carried out
• 328 visits conducted

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 during this quarter

• Audited 36 CMCs
• Issued 10 warnings to CMCs engaged in financial products and services claims
• Continued investigations into 3 CMCs and commenced 1 new investigation
• Imposed a financial penalty of £570,000 on Rock Law Ltd for coercing clients into signing contracts without giving them enough time to understand the terms and conditions before taking authorised payments. The penalty was issued just outside the reporting period in October.
• Issued specific guidance to CMCs pursuing PBA claims

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 during this quarter:

• Imposed a financial penalty of £220,000 on The Hearing Clinic following hundreds of complaints from members of the public who had received speculative calls about claims for noise-induced hearing loss.
• Imposed a financial penalty of £91,845 on Complete Claim Solutions Ltd for making speculative calls about personal injury claims. The penalty was issued just outside the reporting period in October.
• Audited 23 CMCs engaged in direct marketing and issued comprehensive written advice to these businesses.
• Warned 12 CMCs engaged in lead generation. 6 of the warnings were issued as a result of some CMCs failing to carry out sufficient due diligence on introducers.
• Continued investigations into 5 CMCs and in early October 2015 began a new investigation into a CMC potentially engaged in making non-compliant automated calls.
• Continued to share information and work closely with the ICO to assist with investigations.

5. Personal injury claims handling

Personal injury fraud remains a primary 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:

• Engaged with partners from the IFB, IFED, Solicitors Regulation Authority, Information Commissioner’s Office and HM Revenue Customs and have now joined the Insurance Fraud Disruption Group.
• Investigated a number of CMCs for rule breaches.
• Provided 4 statements to South Wales Police, Kent Police, North Yorkshire and Northumbria Police in respect of criminal investigations.
• Provided evidence in a criminal trial at Bradford Crown Court in respect of insurance fraud and money laundering.
• Dealt with 15 referrals to the Government Agency Intelligence Network from a number of partners in respect of ongoing criminal investigations.

A ban on CMCs, solicitors and insurers paying or receiving referral fees in personal injury cases has been in place since 1 April 2013. CMR is closely monitoring how CMCs have adapted to the ban through a proactive programme of audits and visits to make sure those CMCs continue to follow the rules. At the start of 2013, around 1,900 CMCs were operating in the personal injury market. This has since fallen to 921 at the end of September 2015.

CMR took the following action during this quarter:

• Audited 49 CMCs
• Issued 6 warnings
• Identified and referred 31 unauthorised businesses to our specialist team who investigate unauthorised activity