Corporate report

Claims Management Regulator: enforcement actions October to December 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: October to December 2016

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

This quarter, the regulator took the following action:

Activity	October to December 2016	Total since April 2016
Investigations started into authorised CMCs	14	29
Investigations started into unauthorised CMCs	5	26
Licences cancelled	22	69
Financial penalties issued	1	4
Warnings issued	43	138
Audits conducted	103	277
Visits conducted	303	790

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:

• Varied the licences of 2 CMCs: (1) Thomson Legal Limited with measures relating to contracting with clients; and (2) Theclaimteam.com Ltd with measures relating to the prevention of high pressure and making misleading sales practices

• Cancelled the licences of 2 CMCs: (1) Scarlet Marketing Services Ltd for making misleading sales calls, obtaining upfront fees without permission and failure to refund fees; and (2) JAS Financial Advisory Ltd for breaching their additional conditions of authorisation, not co-operating with the Legal Ombudsman and misleading statements

• Audited 34 CMCs

• Continued investigations into 14 CMCs and initiated 7 new investigations

• Issued 6 warnings to CMCs

4. Nuisance calls and texts

Nuisance calls and texts remain 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 Information Commissioner’s Office (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 £3,000 on MG Financial Ltd for failing to conduct sufficient due diligence on the leads accepted from third parties

• Audited 29 CMCs engaged in direct marketing and issued comprehensive written advice

• Warned 6 CMCs engaged in non-compliant direct marketing

• Agreed written undertakings with a CMC for instigating the transmission of emails without ensuring sufficient consent was obtained

• Commenced new investigations into 5 CMCs (3 of which market for financial claims and 2 for personal injury) and progressed formal investigations into a further 12 CMCs for possible breaches of rules relating to nuisance calls, texts and emails

• Successfully had an appeal dismissed in relation to a financial penalty of £220,000 imposed on Aurangzeb Iqbal in August 2015

5. Personal injury claims

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 in relation to enforcing general compliance:

• Audited 46 CMCs and issued advice notices to those that were non-compliant with the referral fee ban, and general rules and regulations

• Issued 16 warnings to CMCs

• Executed a warrant and commenced an investigation into a CMC resulting in a voluntary surrender of its authorisation

• Conducted 285 visits of previously authorised businesses to ensure that they were not undertaking unauthorised activities

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, City of London Police’s Insurance Fraud Enforcement Department (IFED), Information Commissioners Office (ICO) and the Insurance Fraud Bureau (IFB) to combat North West organised crime groups (OCGs)

• Attending IFB Fraud Forums and worked closely with the IFB and partners from the insurance industry to share actionable intelligence

• Working with Local Authorities with a view to disrupting a Northern Organised Crime Group (OCG)

• Working with Cheshire Police to investigate unauthorised trading and to share intelligence

• Attending West Midlands Police Intelligence forums with a view to disrupting OCGs, in particular those involving CMCs

We are also investigating the conduct of regulated CMCs and unauthorised entities in relation to a surge in holiday sickness claims. We are working with the Association of British Travel Agents (ABTA), tour operators and their representatives to review evidence of CMC practices and with the Solicitors Regulation Authority (SRA) on the relationships between CMCs and solicitors operating in this area.

6. Unauthorised trading

CMR has intensified its work to tackle unauthorised trading, including leading an active campaign of unannounced physical interventions into businesses believed to be operating illegally without authorisation. During the last quarter the regulator took the following action:

• Initiated investigations into 5 businesses

• Issued 6 letters of warning to businesses providing personal injury and financial claims services

• Prosecuted ACA Long Eaton Ltd and Mr Adeel Karim for providing regulated claims management services without authorisation. ACA Long Eaton were ordered to pay a fine of £2,500 plus costs of £720. Mr Karim was ordered to pay a fine of £5,000, victim surcharge of £250 and £720 in costs

• In collaboration with Cheshire Police, CMR assisted in the conviction of Anthony Dowd and James Kirkham for Fraud by False Representation. Mr Dowd and Mr Kirkham had sold 20 businesses fake personal injury and PPI information which resulted in thousands of people receiving nuisance calls.

• Removed the websites of 28 businesses

7. Promoting compliance

CMR is proactive in supporting CMCs in complying with the 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 provided compliance information in relation to holiday sickness, Advertising Standards Authority (ASA) adjudications, privacy policies, cookies and changes to business activities.