Corporate report

Claims Management Regulator: enforcement actions January to March 2017

Updated 21 April 2017

1. Live Investigations and recent actions

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

2. Actions: January to March 2017

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

Between January and March 2017, the regulator took the following action:

Activity	January to March 2017	Total since April 2016
Investigations started into authorised CMCs	14	43
Investigations started into unauthorised CMCs	6	32
Licences cancelled	0	69
Financial penalties issued	3	7
Warnings issued	58	196
Audits conducted	92	369
Visits conducted	152	942

3. PPI and other financial claims management

Complaints about mis-sold PPI remain the most active area in the financial claims sector. CMR continues to prioritise and tackle malpractice by CMCs on a risk assessed basis, and in particular where there is a risk of substantial consumer detriment.

The regulator took the following action during this quarter:

• Audited 17 CMCs
• Continued investigations into 14 CMCs and initiated 3 new investigations
• Issued 6 warnings to CMCs
• Imposed a financial penalty of £553,000 on Help Your Claim Limited for rule breaches relating to high pressure sales tactics, misleading statements and failure to suppress consumer contact details upon request
• Provided the Insolvency Service with information to support their investigation into Rock Law Limited’s failure to comply with the conditions of its authorisation and Conduct of Authorised Persons Rules 2014. A financial penalty of £567,423 was imposed in 2015 however the company failed to make any payment and went into liquidation. This resulted in the director disqualification undertaking of Mr Christopher Ross White for a period of 9 years.

4. Personal injury claims management

CMR continues to closely monitor CMCs operating in the personal injury market through a programme of audits and visits. The regulator has been targeting CMCs operating call centres established as misleading consumers, and identifying suspected fraudulent and other criminal activity.

During the last quarter the regulator took the following action:

• Audited 49 CMCs and issued advice notices to those that were non-compliant with the referral fee ban, general rules and regulations
• Issued 14 warnings to CMCs
• Visited 141 CMCs

During this quarter, the regulator continued to collect intelligence from different sources on CMCs involved in fraudulent activities. Some of the actions taken by the regulator to disrupt criminal activity included:

• Attending Government Agency Intelligence Network meetings and actioned referrals from partners in respect of ongoing criminal investigations
• Attending IFB Fraud Forums and working closely with the IFB and partners from the insurance industry to share actionable intelligence
• Working with Local Authorities with a view to disrupting OCGs
• Attending West Midlands Police Intelligence forums in order to disrupt OCGs, in particular those involving CMCs
• Worked with the IFB and Kent Police to assist with the prosecution of a ‘crash for cash’ fraudster who was connected to a gang responsible for over 315 claims for personal injury. This individual was convicted of Conspiracy to Defraud and received a sentence of 7 years.

We are investigating the conduct of regulated CMCs and unauthorised entities in relation to a surge in holiday sickness claims. This includes the regulatory action needed to deal quickly and effectively with any misconduct by either regulated CMCs, lawyers, or those who are simply operating completely illegally. This quarter the regulator has:

• Met with the Association of British Travel Agents (ABTA) in March 2017 to better understand the challenges in relation to this issue to inform further action.
• Worked with tour operators, Spanish hotel representatives and the Spanish Police to discuss concerns regarding a surge in holiday sickness claims in Spain
• Worked in partnership with the Solicitors Regulation Authority (SRA) to share intelligence
• Provided information to the Foreign and Commonwealth Office who have since issued travel advice on this issue to alert travellers that they may be approached by CMCs, and to remind them that any fraudulent claims could lead to legal proceedings

5. Nuisance calls and texts

Nuisance calls and texts remains a compliance priority for CMR. The regulator continues to scrutinise CMCs’ handling of data and leads for direct marketing and participate in multi-agency initiatives to tackle nuisance calls and texts. This includes working closely with the ICO and other regulators to identify and take action against those companies that engage in non-compliant marketing.

The regulator took the following action during this quarter:

• Imposed a financial penalty of £68,000 on Zebra Claims Limited for rule breaches relating to due diligence and record keeping
• Imposed a financial penalty of £10,000 on Stevenson Drake Ltd for making unsolicited marketing calls in relation to personal injury claims
• Audited 18 CMCs engaged in direct marketing and issued comprehensive written advice
• Warned 6 CMCs engaged in non-compliant direct marketing
• Commenced new investigations into 5 CMCs and progressed formal investigations into a further 17 CMCs for possible breaches of rules relating to nuisance calls, texts and emails
• Continued to work closely with the ICO, Ofcom and the Advertising Standards Authority (ASA) to assist with investigations.

6. Unauthorised trading

CMR has further intensified its work to tackle unauthorised trading, including where necessary unannounced physical interventions into businesses believed to be operating illegally without authorisation. CMR is working with partner agencies to improve intelligence gathering and detection, and take targeted action on a risk assessed basis. CMR is also focussed on tackling the unauthorised elements of the holiday sickness claim market.

During the last quarter the regulator received 166 new notifications of unauthorised trading and took the following action:

• Initiated investigations into 6 CMCs
• Removed the websites of 9 CMCs
• Issued 11 letters of warning to CMCs providing personal injury and financial claims services without authorisation

7. Promoting compliance

CMR is proactive in supporting CMCs to comply with conduct rules prior to enforcement action being pursued. This is promoted through our regular business bulletins, published guidance and business advice line. Our recent business bulletin provides compliance information and guidance in relation to recent ASA rulings, Refer a Friend Schemes, and the FCA’s announcement on the deadline for PPI complaints.