Corporate report

Claims Management Regulator: enforcement actions July to Sept 2016

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: July to September 2016

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

Between July and September 2016, the regulator took the following action:

• 12 investigations started into authorised CMCs
• 13 investigations started into unauthorised businesses
• 41 licences cancelled
• 2 financial penalties issued
• 50 warnings issued
• 100 audits conducted
• 245 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 (PBAs), continue to concern consumers and the financial services industry. Priority is being given to the ongoing monitoring of CMCs who operate upfront fee models and CMCs that are linked to them.

The regulator took the following action during this quarter:

• Imposed a financial penalty of £119,500 on Arb Advisory Limited for delays in processing PPI claims and poor complaints handling
• Audited 35 CMCs
• Continued investigations into 8 CMCs and initiated 4 new investigations. We expect to conclude most of these investigations during the next quarter
• Issued 15 warnings to CMCs

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 £50,000 on UKMS Money Solutions Ltd for misleading marketing and failing to conduct due diligence on the leads accepted from third parties in relation to PPI claims
• Cancelled the authorisation of Reactiv Media Ltd, which specialised in packaged bank account claims, for misusing the expression “no win no fee,” failing to conduct due diligence on the leads accepted from third parties
• Cancelled the authorisation of personal injury CMC, Paul Robert William Norton, trading as PN Marketing, for instigating the transmission of unsolicited text messages, failing to carry out and document due diligence on data and data suppliers, failing to clearly identify themselves in marketing, and failing to make sure that third parties comply with the rules
• Audited 28 CMCs engaged in direct marketing and issued comprehensive written advice
• Warned 12 CMCs engaged in non-compliant direct marketing
• Commenced new investigations into 5 CMCs (2 of which market for financial claims, 1 for personal injury and 2 across multiple sectors) and progressed formal investigations into a further 10 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
• The First Tier Tribunal dismissed an appeal by Stanley Financial Holdings Limited’s (formerly Complete Claim Solutions Ltd) against a financial penalty of £91,845 imposed in October 2015

5. Personal injury claims handling

CMR continues to closely monitor CMCs operating in the personal injury market through a programme of audits and visits. Around 1,900 CMCs were in operation just before a ban on referrals fees came into effect in April 2013. This has since fallen to 803 CMCs as at the end of September 2016.

During the last quarter the regulator took the following action in relation to enforcing the referral fee ban and general compliance:

• Audited 53 CMCs and issued advice notices to those that were non-compliant with the referral fee ban and general rules and regulations
• Issued 13 warnings to CMCs
• Executed a warrant at multiple premises connected to a personal injury CMC. CMR is currently reviewing the evidence obtained at the premises.
• Conducted 83 visits of previously authorised businesses

Personal injury fraud remains a primary concern and a key area of action for the regulator. The 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 fraudulent activities. Some of the action 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
• Continuing to work with the National Crime Agency, IFED, ICO and the IFB to combat North West organised crime groups (OCGs)
• Attending IFB Fraud Forums and worked closely with the Insurance Fraud Bureau and partners from the insurance industry to share actionable intelligence
• Working with Local Authorities with a view to disrupting a Northern OCG
• Attending West Midlands Police Intelligence forums with a view to disrupting OCGs, in particular those involving CMCs

6. Unauthorised trading

The level of unauthorised activity remains a concern and CMR is working with partner agencies to improve intelligence gathering and detection, and take targeted action on a risk assessed basis.

During the last quarter the regulator received 38 new notifications of unauthorised trading and took the following action:

• Continued investigations into 13 businesses
• Removed the websites of 28 businesses
• Issued 12 letters of warning to businesses providing personal injury and financial claims services