Corporate report

Claims Management Regulator: enforcement actions January to March 2018

Updated 27 April 2018

1. Live investigations and recent actions

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

2. Actions: January to March 2018

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 2018, the Regulator took the following action:

Activity	January to March 2018	April 2017 to March 2018
Investigations started into authorised CMCs	5	27
Investigations started into unauthorised CMCs	1	8
Licences cancelled	2	45
Financial penalties issued	2	6
Warnings issued	31	252
Audits conducted	95	367
Visits conducted	103	437

3. PPI and other financial claims

Mis-sold PPI claims remain the most active area in the financial claims sector with advertising for claims increasing throughout 2017 and into 2018. The Regulator continues to prioritise and tackle malpractice in this sector on a risk assessed basis, in particular where there is a risk of substantial consumer detriment, but also taking into account how cases are being acquired, claims processed and the quality of complaints CMCs submit to lenders.

The CMR is closely monitoring the activity around ‘Plevin Cases’, where previously rejected cases are being revisited on grounds of undisclosed commission on PPI products. The Regulator has reissued guidance in the form of a Bulletin Entry to clarify how these types of claims should be dealt with.

The Regulator took the following action during this quarter:

• Audited 33 CMCs.
• Continued investigations into 15 CMCs.
• Issued 4 warnings to CMCs.
• Cancelled the authorisation of CDW Bureau Limited with effect from 29 March 2018 following the withdrawal of their appeal.
• Successfully defended an appeal by Help Your Claim Limited which challenged the decision to impose a financial penalty of £553,000. The tribunal upheld the Regulators decision and has agreed with the amount of the penalty imposed.
• Continued to work closely with the Financial Ombudsman, Legal Ombudsman, Financial Services Compensation Scheme and individual lenders to understand developments and receive reports of misconduct in the market.

Two directors of previously regulated CMCs Cerys-Angharad Ltd and Ifonic Plc have been disqualified from acting as a directors for a total of 17 years following an order made by the High Court on 27 November 2017.

4. Personal injury claims

The CMR closely monitors CMCs operating in the personal injury market, including through a programme of audits and visits. The Regulator has been targeting CMCs that are operating call centres established as misleading consumers, and identifying suspected fraudulent and other criminal activity.

This quarter the Regulator took the following action:

• Audited 46 CMCs and issued advice notices to those that were non-compliant with the referral fee ban, general rules and regulations.
• Issued 16 warnings.
• Visited 22 CMCs.
• Continued investigations into 3 CMCs.

4.1 Holiday sickness claims

The CMR has completed its intensive audit and investigations phase of regulated CMCs providing holiday sickness claims, as part of a targeted enforcement project. Although claims management activity is much reduced in this area, the Regulator continues to monitor the marketplace and respond to any allegations of misconduct by CMCs.

A recent intelligence gathering exercise led to the Regulator identifying 12 unauthorised businesses potentially involved in this sector. Further investigation and enforcement action is progressing in respect of those businesses. Ongoing work with the Solicitors Regulation Authority (SRA) and ABTA members ensures that intelligence, information and evidence about market practices continues to be shared.

4.2 Fraudulent activity

The Regulator collects intelligence from different sources on CMCs involved in fraudulent activities. Some of the actions taken by the Regulator to disrupt criminal activity this quarter included:

• Working with enforcement partners regarding holiday sickness claims.
• Working closely with the Insurance Fraud Bureau (IFB) and partners from the insurance industry to share actionable intelligence at the IFB Forum.
• Responding to referrals from partners in relation to ongoing criminal investigations at Government Agency Intelligence Network meetings.
• Attending Police Intelligence Forums in order to disrupt organised crime groups (OCGs), in particular those involving CMCs.
• Meeting with stakeholders in relation to an ongoing investigation and agreeing outcomes.

5. Nuisance calls and texts

Nuisance calls and texts remain a key compliance priority for the CMR. The Regulator scrutinises CMCs’ handling of data and leads for direct marketing and participates 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 this quarter:

• Audited 22 CMCs engaged in direct marketing.
• Issued warnings to 6 CMCs.
• Progressed formal investigations into 21 CMCs engaged in suspected non-compliant direct marketing practices.
• Commenced formal investigations into Click Me Ltd and Consumer Compensation Bureau Ltd for suspected direct marketing breaches.
• Cancelled the authorisation of UK Claims Surgery Ltd for sending SMS marketing without consent, and supplying false and misleading information to the Regulator.
• Issued a financial penalty of £1,950 to DMR Financial Ltd for making unsolicited telemarketing calls to individuals registered on the Telephone Preference Service (TPS) without consent, failing to conduct sufficient due diligence on data, and submitting generic and unsubstantiated claims to lenders.
• Issued a financial penalty of £4,000 to Continental Car Hire Ltd for failing to conduct sufficient due diligence on data accepted from third parties. Directions were also issued requiring it to amend its due diligence and data acquisition processes.
• Successfully defended our decision to cancel the authorisation of UK 4 Legal Ltd at tribunal. The business’s appeal was dismissed and its authorisation remains cancelled.
• The appeal made by Elkador Finance Limited has concluded, with the Tribunal finding in the Regulator’s favour, and a revised financial penalty of £143,640 has now been imposed.
• Continued to work closely with the ICO, Ofcom and the Advertising Standards Authority to assist with investigations.

6. Unauthorised trading

The CMR is working with partner agencies to improve intelligence gathering and detection, and take appropriate action on a risk assessed basis.

During the last quarter the CMR received 127 notifications of businesses trading without authorisation, which were all assessed and the following action taken:

• Started new investigations into 1 unauthorised business and continued 5 ongoing investigations.
• Issued 3 warnings to CMCs trading without authorisation.

The Regulator is proactively focused on monitoring potential unauthorised trading by previously authorised CMCs and investigating those CMCs which are found to be doing so.

7. Other news and publications

• The CMR published business bulletin 34 in April 2018, which includes information and guidance on data processing changes resulting from the upcoming GDPR, guidance on untraceable client settlements, publication of new conduct rules and guidance, and progress of the Financial Guidance and Claims Bill.
• On 24 April the Financial Guidance and Claims Bill concluded Report Stage and Third Reading in the Commons, in which members debated the cold calling ban. The cold calling ban is expected to be debated when the Bill returns to the Lords for consideration of the Common’s amendments and the start of Ping Pong - which is due to commence on 1 May 2018.
• HM Treasury published a 6-week consultation in relation to the transfer of claims management regulation to the FCA on 23 April. This is a technical consultation that seeks comments on the draft secondary regulations that will enable the transfer of claims management regulation to the FCA, with a focus on the scope of regulation and the FCA’s consultation requirements.
• An amending (negative) statutory instrument (SI) was laid before Parliament on 16 April, extending the fixed recoverable costs regime (FRC) to gastric illness claims. A new bespoke Pre-Action Protocol (PAP) for Package Travel Claims is also being introduced. The PAP set outs the conduct and steps the court would expect parties to take before commencing proceedings for package holiday sickness claims. The rules, together with the PAP for Package Travel Claims, will come into force on 7 May 2018.
• The Civil Liability Bill concluded second reading on 24 April, discussing a wide range of issues including fraudulent injury claims, reductions in insurance premiums and proposals to delay a change in the personal injury discount rate until 2020. Committee stage - line by line examination of the Bill - begins on 10 May.