Guidance

CMR bulletin 29

Published 29 July 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This guidance was withdrawn on 1 April 2019

This page has been withdrawn because it’s out of date.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 direct marketing; compliance with the agreed new principles for Letters of Authority; advice when using the Financial Ombudsman Service; and best practice when dealing with customer complaints.

1. Consent for direct marketing

Consent is required in order to make telemarketing calls to numbers registered on the Telephone Preference Service, send text messages (also known as SMS), email, voice broadcast marketing, or to pass consumer data to a third party for marketing purposes. The definition of consent is contained within European Directive 95/46/EC, the directive upon which the Data Protection Act 1998 is based. It requires that, in order to be valid, consent is specific, informed and freely given by the consumer. You must ensure that any consent relied upon for marketing purpose complies with this definition, in addition to the specific requirements set out in The Privacy and Electronic Communications (EC Directive) Regulations 2003. Please see the direct marketing guidance for further information regarding this.

2. Letters of authority to handle PPI cases

We informed you in bulletin 27 that the British Bankers Association, the Professional Financial Claims Association, and a number of CMCs were producing a ‘Statement of Principles’ for letters of authority in PPI cases. These principles were implemented from 1 July 2016 and we encourage CMCs to ensure that authority letters comply. CMCs that follow the principles are likely to see far fewer letters of authority rejected.

3. Making reference to compliance with other regulators codes

We are aware that some CMCs’ marketing and advertising includes misleading statements about compliance with other regulators’ codes such as the Solicitors Regulation Authority (SRA) Code of Conduct. You should not make references to another regulator’s code in such a way that would imply that you are approved by or connected to any regulator (or government agency). For example:

“We are fully compliant with the SRA Code of Conduct 2011”

“The SRA principles are at the heart of our business.”

We have created a list of different types of misleading statements in advertising and marketing.

4.Using the Financial Ombudsman Service - Guidance

In 2013 the Financial Ombudsman Service (the ombudsman) laid out its expectations of all claims managers in an open letter on its website. It provides a guide to handling all types of complaints and we advise that it is used to ensure compliance with the second principle of the conduct rules introduced in 2014.

The ombudsman would like to remind CMCs that any allegations you make to a business must be accurate, specific and individual to your client, and advice and guidance gained from past experience should be provided to your clients to avoid a situation where all cases are referred to the ombudsman.

When you take a complaint to the ombudsman, they will usually provide an informal assessment. If they uphold the case, they will explain what the financial business should do to put things right. If they rejects the case, they will explain the reasons why.

If appropriate either side can ask for the ombudsman to make a final decision, but you should only do this if you have clear and specific reasons to disagree with the assessment. It is not good customer service to ask for a final decision without good cause, and you may be in breach of the of the conduct rules if you do so.

5. Customer complaints - guidance from the Legal Ombudsman

Responding to customer complaints

When a complaint is received, it must be fully responded to within eight weeks. It is also good practice to acknowledge the complaint and confirm when the complainant can expect a response. If a final response is not provided within eight weeks, or if the customer is not satisfied with the final response, the Legal Ombudsman can accept the complaint for investigation.

Signposting to the Legal Ombudsman

When responding to the complainant, advice should be given on how to contact the Legal Ombudsman if they do not consider the complaint to be resolved. The Legal Ombudsman’s contact details should be given, and it should be explained that they have six months from the final response to contact the Ombudsman. You may find this leaflet helpful when signposting complainants.

Cooperating with the Legal Ombudsman

In order to cooperate with the Legal Ombudsman’s investigations, CMCs are expected to provide any requested information within the timescales specified. We also expect CMCs to comply with any remedies that are informally agreed, or directed by the ombudsman. If a CMC does not cooperate with the Legal Ombudsman, they have formal powers to take further action. This might include court action to obtain the information needed, or to enforce a remedy. They can also make a referral to the Regulator for lack of cooperation.

For further information, see the Claims Management Regulator’s Complaint Handling Rules.

6. Recent fines and enforcement action

Since May 2016 the Regulator has issued two financial penalties totalling £355,000 on Elkador Finance Limited and UKMS Money Solutions Limited. In addition the Regulator has cancelled authorisations or imposed conditions on a number of other CMCs, details of which can be viewed on the recent enforcement actions and investigations page

The latest quarterly enforcement update contains further information about recent enforcement actions.

7. CMR 2015/16 Annual Report

The 2016 Claims Management Regulation Annual Report has now been published.