Guidance

CMR bulletin 28

Published 20 April 2016

This guidance was withdrawn on 1 April 2019

This page has been withdrawn because it’s out of date.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.

This edition includes information and advice on compliance including; advertising and marketing practice, compliance with the Data Protection Act; the use of agents. In addition it also includes the outcome of the review of claims management regulation and an update on the fee capping consultation.

Compliance Update

1. New marketing and advertising guidance for CMCs

We have issued updated marketing and advertising guidance to ensure advertising and marketing activities comply with the rules including:

• Telemarketing including the Telephone Preference Service, use of auto diallers, silent calls and automated message telemarketing
• SMS and email marketing
• websites and online privacy

We have taken enforcement action, including financial penalties and cancellation of authorisation against companies that do not follow these rules.

1.1 ICO publishes updated direct marketing guidance

Updated direct marketing guidance from the ICO explains the rules on direct marketing – with a focus on calls and texts to individuals – and how this affects lead generation and the use of marketing lists. The guidance sets out how CMCs can make sure that marketing calls and texts are made in line with the law, and sets out the enforcement action the ICO can take against those who ignore the rules.

2. Are you compliant with the Data Protection Act?

The ICO has launched a self-assessment tool that will help small and medium sized organisations (SMEs) to assess their compliance with the Data Protection Act and provides handy links to relevant guidance and further information. It will generate an assessment rating based on user responses. The easy-to-use toolkit may be completed as one comprehensive assessment that embraces the key obligations that SMEs have in relation to processing their customers’ or clients’ personal information. Alternatively, it can be broken down into separate checklists so you can tailor it to your own organisation’s particular needs and risks. As required by General Rule 15 of the Conduct of Authorised Persons Rules 2014 (CAPR), CMCs must demonstrate compliance with the Data Protection Act.

3. The use of agents or third parties

If you use agents (individuals or businesses acting on your behalf, for example telemarketing), from a regulatory perspective you are responsible for their conduct and any breaches of our rules. It is therefore important that you undertake effective due diligence prior to engaging with such agents.

You must also ensure that you carry out ongoing due diligence, with appropriate controls and monitoring in place so that you are able to demonstrate to us that you have taken reasonable steps to ensure that you are aware of what your agents are doing. As well as agents, you must also have appropriate due diligence procedures in place in respect to other third parties you engage with.

General Rule 2(e) requires you to take all reasonable steps in relation to any arrangement with third parties to confirm that any referrals, leads or data have been obtained legally and compliantly. You must be able to demonstrate that you comply at all times and General Rule 2(d) requires you to maintain appropriate records and audit trails.

New Policy Measures

4. Outcome of Claims Management Regulation Review

The outcome of the fundamental review of claims management regulation led by Carol Brady was announced as part of the Budget on 16th March. As a result, the Government plans to introduce the following measures:

• transfer responsibility for regulating CMCs to the Financial Conduct Authority;
• re-authorise all CMCs under a more robust process; and
• hold managers of CMCs personally accountable for the action of their businesses.

Transfer of claims management regulation to the FCA will require primary legislation and other significant changes. More information will follow in due course.

5. Fee Capping: Cutting the Costs for Consumers – Financial Claims

The Ministry of Justice’s consultation on proposals to introduce a cap on the fees that CMCs can charge consumers has closed and the responses are being considered. A consultation response will be issued in due course.