Guidance

CMR Bulletin 27

Published 4 February 2016

This guidance was withdrawn on

This page has been withdrawn because it’s out of date. Responsibility for the regulation of Claims Management Companies has been taken over by the Financial Conduct Authority.

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This publication is available at https://www.gov.uk/government/publications/cmr-bulletin-27/cmr-bulletin-27

This edition includes information and advice on recent CMR enforcement action; best practice when presenting a claim to financial service providers; the content of letters of authority to handle PPI claims; allowing customers time to consider information provided before signing a contract; and complaint handling training courses for CMCs.

1. Recent CMR enforcement action – a summary

1.1 Licence removed from CMC that made nuisance calls

A company that made almost 40 million nuisance calls in just 3 months has had its licence cancelled. Falcon & Pointer Ltd, based in Swansea, used automatic-dialling technology to make millions of calls about mis-sold PPI in 12 weeks – leading to hundreds of complaints and warnings from the CMR Unit and the Information Commissioner’s Office.

1.2 More financial penalties issued

We issued a financial penalty of £850,000 against a company responsible for bombarding people with millions of nuisance calls. The National Advice Clinic, based in Lancashire, which also trades as the Industrial Hearing Clinic or the Central Compensation Office, made nearly 6 million calls between October 2014 and April 2015 about noise induced hearing loss claims.

This is the fourth and biggest fine issued so far, bringing the total fines issued to over £1.7 million.

1.3 CMR Unit executes warrant on suspected unauthorised nuisance calls business

Officers from the CMR Unit successfully executed a warrant in Swansea with support from local Trading Standards and South Wales Police on a business suspected to be operating illegally without a licence. The business is alleged to be responsible for making misleading sales calls and obtaining payments from consumers.

See all of our recent CMR enforcement actions and investigations.

2. Presenting claims to financial service providers

Before submitting a claim to a financial services provider, you must ensure that a comprehensive initial fact find is undertaken. This will ensure that proper and accurate instructions are obtained and that a complete case is submitted at the earliest opportunity. The claim should be presented to the same level of detail as required when sending a complaint to the Financial Ombudsman Service (the ombudsman). Some CMCs collect and present this information to the financial services provider with the letter of complaint on the ombudsman PPI consumer questionnaire – as this is a way of ensuring all necessary information is presented.

Failure to present the fullest case possible at the outset of a claim or introducing new information when submitting a claim to the ombudsman can amount to a breach of General Rule 2(a) and Client Specific Rule 1(b) of the Conduct of Authorised Persons Rules 2014 (CAPR).

The Alternative Dispute Resolution (ADR) directive came into operation on 9 July 2015. This changed the grounds on which the ombudsman can consider a complaint if a CMC (or consumer) has been late in sending it to them. In such cases the ombudsman now needs to have the financial service provider’s consent.

Read the ADR guidance for CMCs handling financial complaints here.

4. Letters of authority for PPI complaints - British Bankers Association statement of principles

The British Bankers Association (BBA) has announced a statement of principles which sets standards for CMCs when taking letters of authority from customers, to allow them to handle PPI mis-selling complaints on their behalf. The principles set out the content to be included in a letter of authority. This will enable customers’ complaints to be handled efficiently by CMCs and financial service providers. CMC customers will benefit from a clear understanding of the nature of the authority being given, together with details such as the PPI provider, product(s) and type of account(s).

Members of the BBA have worked with the CMR Unit, the Professional Financial Claims Association (PFCA) and a number of CMCs to shape the principles for PPI letters of authority. A number of the larger retail banks are making system changes to implement these principles by April 2016 and CMCs should familiarise themselves with the principles and review current authority documentation.

5. Financial Services Compensation Scheme

When presenting complaints to the Financial Services Compensation Scheme (FSCS), some CMCs have made the error of setting out the complaint as if it is being made against the FSCS.

You should be aware that:

  • The FSCS is independent and their role involves dealing with claims made against FCA registered firms declared in default.
  • A customer makes a claim against a firm which is in default – they do not make a claim against the FSCS. Compensation payments are funded by levies paid by financial services firms regulated by the FCA.
  • The FSCS is a fund of last resort. All reasonable efforts must be made to ensure a claim cannot be made elsewhere.
  • If a financial service provider is still trading but is simply not responsive, you should approach the Financial Ombudsman Service
  • The FSCS have compensation limits and the amount paid out in a given case may not be 100% of the amount of loss, details can be found on their website
  • The FSCS resolve most claims within 6 months although more complicated claims can take longer.
  • Accepting a compensation payment which the FSCS has made indicates acceptance of the compensation as full and final settlement. If a consumer wishes to dispute the compensation, the money needs to be returned to the FSCS with explanation why the payment was incorrect, and supporting evidence.

Any referral of a claim to the FSCS must be made in line with responsibility requirements of General Rule 2 of the CAPR.

6. Customer information, contracts and signatures

Client Specific Rule 11 of the CAPR requires you to provide consumers with specific pre-contractual information including terms and conditions. The Provision of Services Regulations 2009 (Regulation 11) states that such information must be supplied “in good time before the conclusion of the contract”.

If you contract with consumers over the telephone or in person e.g. marketing stands, then you must allow consumers sufficient time to read and consider the documentation before they sign the agreement. So far we have taken enforcement action against two CMCs Rock Law Ltd and Falcon & Pointer Ltd for failing to allow consumers sufficient time to consider the paperwork provided (as well as other issues).

We are advising CMCs that they are certainly complying with these provisions if they allow 24 hours for the consumer to consider the pre-contractual information (including terms and conditions) before they sign the contract.

7. Marketing to previous clients

Marketing aimed at previous clients requires sufficient consent as set out by The Privacy and Electronic Communications (EC Directive) Regulations 2003 (PECR) as well as the Data Protection Act 1998 (DPA). Failure to comply with this legislation would constitute a breach of General Rule 5 and Client Specific Rule 4 of the CAPR.

Regulation 21 of PECR prohibits the making of marketing calls to any number registered to the Telephone Preference Service (TPS), including numbers owned by previous clients. If you intend to rely on ‘overriding consent’ you must ensure that it is current. The Information Commissioners Office (ICO) recommends that businesses do not to rely on any indirect consent provided more than 6 months ago.

Marketing texts and emails should not be sent to previous clients without prior consent, in accordance with Regulation 22 of PECR. Any consent provided more than 6 months ago should not be relied on. If you intend to rely on a ‘soft opt-in’ you must meet the following requirements set out in Regulation 22(3) of PECR:

  • You obtained the contact details in the course of a sale (or negotiations for a sale) of a product or service to that person;
  • You are only marketing your own similar products or services; and
  • You gave the person a simple opportunity to refuse or opt out of the marketing, both when first collecting the details and in every message after that.

You must keep clear records of consent in order to demonstrate compliance, as required by General Rule 2d of CAPR.

Requests for information have been sent to all CMCs in order to issue annual fee invoices for 2016/17.

As well as confirming some basic information about the business, we are asking for your claims management related turnover for the 12 months to 30 November 2015. The deadline for providing this information is 12 February 2016. You should have received information on how to access the relevant online form.

If you have not received either the email, letter or have made any changes to your business that you have not updated us about (for example your contact person or address) please inform us as a matter of urgency by email at authorisations@claimsregulation.gov.uk

9. CMR annual regulation fee levels for 2016/17

The response to the consultation on proposed CMR fee levels has been published. The response paper confirms that annual regulation fee and application fee levels will remain unchanged for the 2016/17 regulatory year.

10. Complaint handling – training courses

The Legal Ombudsman has two new courses available for CMCs to help improve their complaints handling:

This will be an opportunity to find out about the Legal Ombudsman’s approach to complaints handling and how it investigates complaints. The course will cover best practice in complaint handling and the trends that have been identified to date.

Swansea: 9 March 2016, 1-5pm, Dragon Hotel, SA1 5LS

This new course will build on previous courses in terms of the themes and trends that the Legal Ombudsman have seen during the first year of the CMC jurisdiction. They will provide an update on their statistics and share further information about the pilot initiatives they have launched. In addition to this, they will look at some of the issues that CMCs face when handling complaints. The course will also focus on the importance of complaints and what can be learnt from analysing the root cause of these. They will consider first tier complaints processes and remedies, including the role that an apology can play.

Manchester: 1 March 2016, 1-5pm, The Studio, M1 1FN

Register here to book a place on these courses

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