Corporate report

Claims Management Regulator: enforcement actions October to December 2017

Updated 27 April 2018

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 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 October and December 2017, the regulator took the following action:

Activity	October to December 2017	Total since April 2017
Investigations started into authorised CMCs	3	22
Investigations started into unauthorised CMCs	1	7
Licences cancelled	7	43
Financial penalties issued	2	4
Warnings issued	81	221
Audits conducted	80	272
Visits conducted	180	314

3. PPI and other financial claims

Complaints about mis-sold PPI remain the most active area in the financial claims sector. The CMR continues to prioritise and tackle malpractice in this sector 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 20 CMCs
• Continued investigations into 14 CMCs
• Issued 3 warnings to CMCs
• Cancelled the authorisation of Harrington Advisory Ltd with effect from 22 December 2017 after they withdrew an appeal
• Continued preparatory work to defend decision to impose a financial penalty on Help Your Claim Ltd following their appeal
• Continued preparatory work to defend decision to cancel the authorisation of CDW Bureau Ltd following their appeal. While this case is being appealed, the cancellation has been stayed by the appeal tribunal.
• Assisted the Insolvency Service with a case involving Scarlet Marketing Services Ltd following their liquidation.

4. Personal injury claims

CMR closely monitors CMCs operating in the personal injury market 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 50 CMCs and issued advice notices to those that were non-compliant with the referral fee ban, general rules and regulations
• Issued 22 warnings
• Visited 12 CMCs

4.1 Holiday sickness claims

The regulator continues to monitor the martketplace and investigate any allegations of misconduct by CMCs in order to tackle misconduct in this sector, including:

• Addressing misleading marketing
• Monitoring telemarketers who are sourcing and using data legitimately
• Ensuring that the activities of CMCs are not likely to place solicitors in breach of their code
• Dealing with unauthorised activity quickly and effectively
• Continuing to work closely with the Solicitors Regulation Authority (SRA) and ABTA members who provide intelligence, information and evidence about market practices. CMR has also shared intelligence with the SRA about solicitors suspected of malpractice.

CMR has completed the bulk of investigations and enquiries into regulated CMCs providing holiday sickness claims, as part of a targeted enforcement project. Between October and December 2017, 33 CMCs were audited and 7 were subsequently warned for rule breaches. 4 CMCs surrendered their authorisation prior to audit and 4 CMCs surrendered their authorisation post audit as they were not able to operate in compliance with the rules. The regulator has formally investigated 3 authorised CMCs and cancelled the authorisation of Allsure Ltd.

Overall, the regulator has noted a significant decrease in identified unauthorised businesses involved in holiday sickness claims. During this quarter, the regulator identified 30 unauthorised businesses potentially involved in this sector and took the following action:

• Visited 14 businesses which have since ceased trading unauthorised
• Removed the websites of 13 businesses and other social media platforms
• Continued investigations into 2 businesses

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
• Attending Insurance Fraud Bureau (IFB) Forums and working closely with the IFB and partners from the insurance industry to share actionable intelligence
• Attending Government Agency Intelligence Network meetings and responding to referrals from partners in relation to ongoing criminal investigations
• 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 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 23 CMCs engaged in direct marketing and issued comprehensive written advice
• Issued 12 warnings to authorised CMCs engaged in non-compliant direct marketing
• Progressed formal investigations into 21 authorised CMCs
• Issued a financial penalty of £198,000 to Media Match Ltd for making unsolicited telemarketing calls to individuals registered on the Telephone Preference Service (TPS) without sufficient consent, and conducting insufficient due diligence on data.
• Issued directions to ESC Solutions Limited for accepting personal injury leads from unauthorised introducers without conducting any due diligence and making unsolicited telemarketing calls for personal injury claims without consent.
• Participated in Operation LINDEN – a cross-industry working group involving other regulators, consumer groups, trade associations, and industry representatives to share intelligence and co-ordinate activity in relation to nuisance calls and texts
• Continued to work closely with the ICO, Ofcom and the Advertising Standards Authority to assist with investigations

6. Unauthorised trading

The regulator has further intensified its work to tackle unauthorised trading. CMR is working with partner agencies to improve intelligence gathering and detection, and take appropriate action on a risk assessed basis. The regulator is also focused on tackling the unauthorised elements of the holiday sickness claims market.

During the last quarter the CMR received 130 notifications of businesses trading without authorisation, which were all assessed and the following action taken:

• Issued 22 letters of warning to businesses offering claims management services without authorisation
• Started investigations into 1 unauthorised business and continued 7 ongoing investigations
• Prosecuted My Life Adviser Ltd for conducting regulated claims management services without authorisation. The company was fined £40,000 for 8 offences under the Compensation Act 2006 and ordered to pay over £40,000 in costs and a victim surcharge of £170.
• Administered a caution to a CMC for providing regulated claims management services without authorisation.
• Assisted the ICO with executing a warrant at two premises that were suspected of belonging to an unauthorised business responsible for making millions of automated calls regarding personal injury claims. CMR is continuing to assist the ICO with this investigation.
• Proactively focused on monitoring potential unauthorised trading by previously authorised CMCs and investigating those CMCs which are found to be doing so.

7. Other compliance news and publications: October to December 2017

• CMR published business bulletin 33 in December 2017, which includes information and guidance in relation to General Data Protection Regulation Rules, claims for cavity wall insulation, and regulation fees for 2018/19.