Corporate report

Claims Management Regulator: enforcement actions July to September 2018

Updated 6 December 2018

1. Live investigations and recent actions

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

2. Actions: July to September 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 July and September 2018 the Regulator took the following action:

Activity	July to September 2018	Total
Investigations started into authorised CMCs	3	4
Licences cancelled	29	42
Warnings issued	43	82
Audits conducted	79	160
Visits conducted	77	189

3. PPI and other financial claims

Mis-sold Payment Protection Insurance (PPI) continues to be the most active claims area in the financial claims sector with £4.4bn paid out in redress since October 2017. CMCs in this market are also representing clients to bring complaints about Short Term/Payday Loans, Packaged Bank Accounts, Investments, Pensions and Mortgages.

The CMR continues to prioritise and tackle malpractice in the financial claims sector on a risk assessed basis. This primarily continues to be led by conducting compliance audits of CMCs and carrying out investigations where suspected serious breaches are identified. When conducting audits, officers will examine various aspects of a CMC operation including client acquisition and sales, client paperwork, claim processing, complaints handling and other processes and systems.

Up-front fees were banned in PPI from 1 April 2018. We conducted an initial review to ensure there were no CMCs breaching this requirement. We have continued to monitor complaints but have found no evidence of any CMCs operating in breach of the ban.

On 10 July 2018 an interim fee cap of 20% plus VAT came into force for PPI claims. Guidance was issued on 11 May 2018 to help CMCs prepare for the cap after its introduction in the Financial Guidance and Claims Act 2018. We conducted a review of contractual information and marketing material of all CMCs providing PPI claims services to determine whether these had been updated to reflect the interim fee cap. As part of this review:

• 825 websites were examined
• letters of advice were issued in relation to 148 websites
• 8 CMCs were identified for follow up work

July to September 2018 the CMR has:

• audited 24 CMCs
• continued and progressed investigations into 9 CMCs
• issued a warning to one CMC

The CMR published Bulletin 35 in September reminding CMCs of steps they should take before referring a complaint the Financial Ombudsman Service and what is expected when presenting complaints about short-term lending.

The CMR also issued a communication to 180 PPI CMCs about the use of data subject access requests. The Information Commissioner’s Office (ICO) highlighted the potential risks of holding vast amounts of consumer data likely to be generated by routinely using data subject access requests to obtain client information. The ICO therefore encouraged CMCs to consider alternative methods of obtaining required information where available and appropriate.

4. Personal injury, holiday sickness and housing disrepair

The CMR closely monitors CMCs operating in the Personal Injury (PI) market through a programme of audits and visits. Audits continue to be arranged to assess compliance with the referral fee ban, rules on marketing and how CMCs engage with clients. Our PI work has been extended to include supervision and enforcement of CMCs providing holiday sickness and housing disrepair claims services.

July to September 2018 the CMR has:

• audited 39 CMCs and issued advice to those that were non-compliant with the referral fee ban, Conduct of Authorised Persons Rules and Regulations
• issued 8 warnings
• visited 13 CMCs
• continued an investigation into one CMC

The regulator’s risk based approach, has led to the identification of CMCs involved in suspected fraudulent and other criminal activity. The CMR has continued to collect intelligence on CMCs from a wide range of different sources and works closely with stakeholders and law enforcement agencies in order to disrupt this activity and support live operations.

July to September 2018 the CMR has:

• met with a range of Local Authorities, social housing providers and solicitors in respect of current practices in the housing disrepair sector
• worked with Local Authorities with a view to supporting action against practices which harm consumers
• provided support and statements to regional Police Forces investigating fraud and other crimes

5. Nuisance calls and texts

Nuisance calls and texts remain a concern to the UK public and it is still a key compliance priority for the CMR. The CMR scrutinises CMCs handling of data and leads for direct marketing and participates in multi-agency initiatives to tackle those responsible for making nuisance calls and texts or looking to benefit from leads generated using these practices. This includes working closely with the ICO and other regulators to identify and take action against those companies that engage in non-compliant marketing.

July to September 2018 the CMR has:

• audited 28 CMCs engaged in direct marketing
• issued warnings to 3 CMCs
• progressed formal investigations into 13 CMCs engaged in suspected non-compliant direct marketing practices
• allowed Hardwick Financial Solutions Ltd and Consumer Action Ltd to surrender their authorisation during the course of Regulation 35 investigations (bringing those investigations to an end)
• defended our decision to impose a financial penalty on Media Match Ltd for breaches of the Conduct of Authorised Persons Rules, the business’s appeal was allowed in part and the level of penalty reduced from £198,000 to £99,072
• continued to work closely with the ICO, Ofcom and the Advertising Standards Authority to assist with investigations
• updated our Advertising and Marketing guidance to include changes on GDPR and the cold call ban

6. Unauthorised trading

The CMR remains focussed on tackling unauthorised activity in the claims management sector. The CMR is working with partner agencies to improve intelligence gathering and detection, and take proportionate and effective action.

Between April to June 2018 the CMR received over 100 reports of businesses conducting claims management activity without authorisation. Each report is reviewed and risk assessed with strategies developed in order for action to be taken to disrupt the unauthorised activity. Following this review process and engagement with several of those the CMR believed to be involved in unregulated activity, 12 warnings were issued to businesses requiring them to immediately cease claims management activity or be subject to further enforcement action.

As well as reviewing incoming reports of businesses that are not authorised to provide regulated claims management services, the CMR also proactively monitors previously authorised businesses who have either surrendered their authorisation or had their authorisation cancelled. A programme of unannounced site visits to the premises of formerly authorised businesses was conducted and 64 of these visits have been carried out during April to June 2018.

7. Redundancy Payment Service

The CMR has recently been working with the Insolvency Service who manage the redundancy payment service. The Insolvency Service has helped the CMR in identifying businesses providing services to former directors of liquidated companies. These businesses assist those former directors apply to the redundancy payment service for payment of redundancy and other money they may be owed by the liquidated company. Businesses providing these services are required to be authorised by the CMR and many have obtained authorisation following contact from the CMR.

Subsequently, the CMR has worked with the Insolvency Service to help address some of the concerns in this area. The Insolvency Service has accompanied the CMR on audits of CMCs and the CMR has also attended with the Insolvency Service on visits of Insolvency Practitioners involved in this work.