Guidance

CMR Bulletin 31

Published 10 March 2017

This guidance was withdrawn on 1 April 2019

This page has been withdrawn because it’s out of date.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 client signatures, recent Advertising Standards Authority (ASA) rules on advertising, Refer a Friend schemes, transferring or ending client relationships, and misleading online marketing.

Compliance Update

1. Recent ASA rulings: How fees and taxes should be communicated to consumers

Based on previous Advertising Standards Authority (ASA) rulings, Committees of Advertising Practice (CAP) and the ASA have developed advice to assist CMCs on how fees and taxes should be communicated to consumers.

If you are using examples of previous successes in advertisements, when quoting figures you must ensure that you communicate clearly what they represent in order not to mislead consumers. Consumers should be given clear written information to help them understand whether charges will be deducted or taxes applied.

2. Misleading online marketing statements

We continue to investigate misleading pay per click advertising campaigns on social media and search engines. We are aware that these advertisements are often operated and maintained by third parties on a CMC’s behalf. However the authorised CMC is still responsible for the content. Client Specific Rule 1c of the Conduct of Authorised Persons Rules 2014 (CAPR) state that any statement made as part of an advertising campaign by a CMC must ensure it is clear, transparent, fair and not misleading

You should also be reviewing your advertising and marketing in light of recent rulings made by the ASA to ensure that any statement made complies with the CAP Code. The ASA has recently issued adjudications where advertising was deemed to be misleading and in breach of the CAP Code. These decisions represent the ASA’s interpretation of the CAP Code and compliance is part of CAPR Client Specific Rule 2.

It must be clear who is responsible for an online advert without needing to click the link and access the website to find out. Client Specific Rule 6(a) states that in soliciting business through advertising, marketing and other means, a business must clearly identify the name of the advertiser.

All ASA adjudications for the last five years can be viewed on the ASA website. If you are unsure as to whether your adverts comply with the CAP Code, please contact the ASA for advice in the first instance.

3. Refer a Friend Schemes

CMCs that operate ‘refer a friend’ or similar schemes to promote their services should ensure that they do not incentivise or allow individuals to behave more like a business by actively seeking out potential claimants for the rewards being offered. Where this occurs, the referrer will be acting in contravention of the Compensation Act 2006, as they are not authorised to conduct regulated claims management activity. The CMC may also be considered to be aiding and abetting an offence of unauthorised claims management activity as well as breaching the CAPR by accepting cases from unauthorised sources.

When assessing these schemes, we will review the method and value of the rewards being offered to those recommending friends, the terms in place governing the scheme and the controls and measures that CMCs have in place to monitor the nature, frequency and volume of recommendations.

Should you call someone whose number has been passed to you by a client, you must be able to give details of the source of that data. You will also need to have regard to Regulation 21 of The Privacy and Electronic Communications (EC Directive) Regulations 2003 (PECR). Should someone refer details of a friend whose number is listed on the TPS register you cannot call them without having that individual’s specific consent.

You must abide by the same legal obligations when gathering or using referred contact details, just as you would when gathering information directly. In order to avoid the risk of breaching PECR and the CAPR, your client should ask their friends to contact your business directly, rather than asking your client to pass you contact details for their friends.

4. Client signatures

We detected bad practices by some CMCs in relation to client signatures. These include:

• Copying and pasting signatures from one document to another
• Obtaining an electronic signature to ‘drop’ into a range of documents
• CMCs requesting clients sign blank documents for the CMC to complete later
• Inputting or changing dates on letters of authority
• Forgery of client signatures.

It is not permitted to change, amend or tamper with any document signed by a client and any document that requires a client’s signature must be seen and agreed to by the client. The client’s signature is evidence that they have agreed or authorised the content of the document. You should provide full information on a form for the client to sign, or ensure that the client fills in all the required details themselves before they sign. Any document that is amended for any reason needs to be given to the client for review and a new signature obtained; or at the minimum, the amendment initialled and dated by the client. The document you hold and use should be a true copy of the document at the time the client signed it.

In accordance with CAPR, General Rule 1 requires you to conduct your business with honesty and integrity; General Rule 2 (b) states that any representations you make to a third party must not be fraudulent, false or misleading; and General Rule 5 requires you to observe all relevant laws, including the Fraud Act 2006 which may be relevant to some of these practices. We take this issue very seriously and evidence that any of the activities described above, or something similar, has occurred could lead to an investigation and enforcement action, as appropriate.

5. Financial claims on behalf of deceased clients

Each bank or financial institution will have its own policy and procedures when handling a complaint made on behalf of a deceased customer. General guidance advises that:

• You must ensure that you are acting for the person with the legal entitlement to complain, either the executor of the will or the administrator (if there is no will). The Letter of Authority will need to be signed by this person and must include their full contact details, as well as the date of birth and last addresses of the deceased.
• If your clients dies during the processing of a claim, you have no authority to continue without consent of the person with legal entitlement to complain. However, if this person decides to end your contract you can expect to be paid your cancellation fee from the estate.
• You will need to provide the bank with the Death Certificate and a Grant of Probate or Letters of Administration if they exist, and possibly the will. Most banks will require these at complaint stage, if not earlier.
• The bank has to assess who is entitled to the funds. Even where a will exists, there may be other wills; so the bank will usually require the recipient of the funds to sign an indemnity that can be shown in the event someone else tries to claim.

Most banks will have stricter procedures regarding payment of redress where the award is over a certain amount and these will be outlined in the final response letter.

6. Transferring or ending client relationships

If you are considering transferring your clients to another CMC, ceasing to trade, or changing contact details, we encourage CMCs to view our previously issued special bulletin which provides specific guidance on:

• Transferring your clients to another CMC
• Obtaining clients and cases from another CMC
• Ending representation of clients without transferring them to another CMC
• Changes to contact arrangements.

Other CMR News and Updates

7. Annual fees now due for regulated CMCs

We contacted all regulated CMCs recently to request information with regard to the annual fee for authorisation. The deadline for return of information was 17 February 2017. If you have not yet provided the required information you should do so as soon as possible by using our online form.

If you have any queries or require advice regarding annual fees please call the authorisations line on 0333 200 1321 or email authorisations@claimsregulation.gov.uk. Please quote your authorisation number when contacting us.

8. Recent enforcement action

Read our latest report summarising the action taken against CMCs in breach of the rules during the last quarter.

9. Whiplash reform programme

The Government published details of its whiplash reforms on 23 February. Key measures will be taken forward in the Prisons and Courts Bill and through secondary legislation and rules as appropriate, to:

• Introduce a new fixed tariff of compensation for whiplash claims
• Ban pre-medical offers
• Increase the small claims track limit for personal injury claims.

10. FCA announce deadline on PPI complaints

The Financial Conduct Authority (FCA) has confirmed that it will introduce a deadline for making new payment protection insurance (PPI) complaints. The final deadline for making a new PPI complaint will be 29 August 2019. The FCA will launch a two-year public awareness campaign in August 2017 to raise awareness amongst consumers about the deadline and how to claim for compensation.

The FCA’s policy statement confirms the final rules and guidance in relation to:

• A new rule which sets a deadline of 29 August 2019 for consumers to complain about the way they were sold PPI
• An FCA-led consumer communications campaign designed to inform consumers of the deadline
• A new fee rule on 18 firms to fund the consumer communications campaign
• The handling of PPI complaints in light of the Supreme Court’s decision in Plevin v Paragon Personal Finance Limited.