CMR Bulletin 32
Published 18 August 2017
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This edition includes information and advice on direct marketing, identifying and protecting vulnerable clients, rules and guidance in relation to Plevin, and an update on the progress of the Financial Guidance and Claims Bill.
Compliance Update
1. Direct marketing
Tackling non-compliant direct marketing practices remains a key priority for the Claims Management Regulator (CMR). We have previously issued advice and guidance regarding this issue, however are still finding that many businesses are unable or unwilling to comply. As such, we have published supplementary guidance to provide clarification on our rules, and to set clear standards for businesses to adhere to. Failure to comply with this guidance may lead to enforcement action being taken against you.
2. Rules and guidance in relation to Plevin
In March 2017, the Financial Conduct Authority (FCA) announced that it was to introduce new rules and guidance on the handling of PPI complaints in light of the Supreme Court’s decision in Plevin v Paragon Personal Finance Limited (Plevin). In March 2017, the FCA announced final rules and guidance on handling PPI complaints. These will come into effect on 29 August 2017. Prior to commencement, we want to ensure that claims management companies (CMCs) understand the rules and expectations in handling cases relating to Plevin and have published supplementary guidance.
3. Misleading price indications
The purpose of displaying fees is to allow consumers to make an informed decision as to whether to use your services. We have found that some businesses are displaying their fees exclusive of VAT and may therefore be providing misleading price indications to consumers. To ensure transparency in the pricing of your services, please make sure that you refer to the Client Specific Rule (CSR) 2 of the Conduct of Authorised Persons Rules 2014 (CAPR) and 3.18 of the CAP code.
CSR 2 of the CAPR states:
All advertising, marketing and other soliciting of business must conform to the relevant code:
- The UK Code of Non-Broadcast Advertising, Sales Promotion and Direct Marketing (CAP Code); or
- The UK Code of Broadcast Advertising (BCAP Code).
These codes are accessible at www.cap.org.uk/advertising-codes.aspx. For the purposes of this rule a business’s website shall be deemed to constitute advertising, and must comply with the CAP Code.
Rule 3.18 of the CAP Code states that when advertising:
Quoted prices must include non-optional taxes, duties, fees and charges that apply to all or most buyers. However, VAT-exclusive prices may be given if all those to whom the price claim is clearly addressed pay no VAT or can recover VAT. Such VAT-exclusive prices must be accompanied by a prominent statement of the amount or rate of VAT payable.
Quoting prices exclusive of VAT would put you in breach of CSR 2 of the CAPR and would also put you in breach of General Rule (GR) 5 of the CAPR which requires businesses to comply with Regulation 6 of The Consumer Protection from Unfair Trading Regulations 2008.
If VAT is charged you must state your fee inclusive of VAT.
4. Pre-submission checks reminder – no PPI and duplicate complaints
We have seen an increase in complaints about CMCs not gathering sufficient information from their clients in the first instance. There are still a large number of pre-submissions being made to lenders where the client has no relationship with the lender for the product in question.
We are particularly concerned about the increasing volume of duplicate claims being submitted to lenders where a claim has previously been made by a client against the same product.
Please familiarise yourself with the guidance previously issued on investigating and establishing the merits of a financial claim.
We will continue to monitor this matter closely. If you fail to demonstrate that you are seeking to gather sufficient information from your clients in the first instance, then we will consider taking enforcement action.
5. Identifying and protecting vulnerable clients
To assist CMCs in formulating procedures to identify and protect vulnerable clients, we recommend you refer to the Direct Marketing Association’s guidelines for call centres dealing with vulnerable clients. The advice within these guidelines remains relevant to most CMCs, including those that don’t operate a call centre. To ensure best practice, we would recommend reviewing your policy on a regular basis.
The Financial Conduct Authority has published a practitioners’ pack aimed at financial institutions; much of this content is relevant and useful for CMCs. The Law Society guidance on meeting the needs of vulnerable clients is more detailed and aimed at solicitors, but will assist some CMCs, particularly those that litigate on behalf of clients.
GR 2 (f) of the CAPR requires you to have appropriate procedures in place to identify and protect vulnerable consumers. Using these tools will help you create a policy tailored to the needs of your business and clients.
6. Transfer of business
If you are considering transferring your clients to or from another CMC, ceasing to trade, or changing contact details, please see our previously issued special bulletin which provides guidance around transferring or ending client relationships.
Other CMR news and updates
7. Financial Guidance and Claims Bill
The Financial Guidance and Claims Bill was introduced in the House of Lords in June, starting the legislative process of transferring responsibility for claims management regulation from the Ministry of Justice to the Financial Conduct Authority, and the establishment of a tougher regulatory framework than provided under the Compensation Act 2006. Second reading of the Bill took place on 5 July and received strong cross-party support. Committee stage will begin on 6 September 2017. The progress of the Bill can be followed on the Parliament website where you can sign up for email alerts.
8. Recent enforcement action
Read our latest report summarising the action taken against CMCs in breach of the rules during the last quarter.
9. Annual Report 2016-17
The Claims Management Regulation Annual Report 2016-17 has now been published. The report covers the main developments, achievements and progress made in claims management regulation over the last 12 months and sets out our priorities for the future.
10. The Legal Ombudsman professional learning course
The Legal Ombudsman is administering a course on ‘Remedies and learning from complaints for the claims management industry’ on 11 September 2017. This course will look at themes and trends seen by the Legal Ombudsman in their jurisdiction, including common complaints seen and how these can be prevented, contemporary issues faced by CMCs when handling complaints, and an update on their statistics. Please refer to the Legal Ombudsman website for more information and details on how to register your interest in attending.
11. Claims Management Regulation 10th Anniversary Publication
We have published a special report to celebrate the 10th anniversary of claims management regulation, highlighting the significant steps taken to clean-up the claims industry throughout this period.
This report covers the main developments, achievements and progress made in claims management regulation over the last 10 years. Highlights include:
- Timeline of key reforms
- Enforcement statistics and trends
- Action we’ve taken to protect consumers
- Quotes from key stakeholders