Guidance

CMR Bulletin 34

Published 6 April 2018

This guidance was withdrawn on 1 April 2019

This page has been withdrawn because it’s out of date.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

The CMR business bulletins aim to highlight current developments and provide an update on issues that are of interest or affect claims management services.

This edition includes information and advice on data processing changes resulting from the upcoming GDPR, guidance on untraceable client settlements, publication of new conduct rules and guidance, and progress of the Financial Guidance and Claims Bill.

1. Compliance Update

1.1 General Data Protection Regulation (GDPR)

On 25 May 2018, most processing of personal data by organisations will have to comply with the General Data Protection Regulation (GDPR). The Information Commissioner’s Office (ICO) has produced a guide to the GDPR and also a number of tools including ‘GDPR: 12 steps to take now’ and a GDPR checklist.

These changes are likely to affect all CMCs and we urge you to familiarise yourselves with the guidance, make any changes needed to comply with GDPR and to keep up-to-date with developments on the ICO’s what’s new summary.

1.2 Guidance on untraceable client’s settlements in client accounts

Some CMCs have contacted us about outstanding funds in client accounts where they are unable to trace the client(s). We have also identified this issue whilst conducting routine audits with other CMCs.

CMCs that handle client money must comply with the Client Account Rules 2006 at all times. We also expect CMCs to make reasonable attempts to trace and contact clients where their contact information has changed. This is most common where the client has moved address during the course of the claim and not informed the CMC of new address details.

CMCs handling client money should therefore implement their own procedures for these circumstances. Reasonable steps for tracing clients may include the following (but is not limited to):

• Conduct a detailed review of the client’s file to identify all contact details
• Send an email to all known email addresses for the client
• Write to all the known addresses of the client
• Call and text, where applicable, all client telephone numbers on record
• Make attempts to contact the client via third parties, for example, the financial services provider the complaint was made against, or enquire if they can forward correspondence onto the client
• Check available telephone directories and public electoral roll
• Carry out internet and social media searches against the client’s name

Should internal procedures be exhausted, there are other tracing and forwarding services available which may be considered, including those provided by the Sheriff’s Office and Department for Work and Pensions.

CMCs must record and document details of the steps it has taken to contact untraceable clients, and settlements must remain in the CMCs client account until they can be distributed. If all reasonable attempts to locate a client have been exhausted with no success, then the CMC should contact us for further guidance.

1.3 Online marketing and advertising

Some CMC’s advertise on third party websites (often news sites), social media and search engines. Although some of these adverts are operated and maintained by third parties on a CMC’s behalf, the authorised CMC is still responsible for the content.

Client Specific Rule 1c of the Conduct of Authorised Persons Rules (CAPR) states that any statement made as part of an advertising campaign by a CMC must ensure it is clear, transparent, fair and not misleading. Client Specific Rule 9 states that a business must seek to ensure that any publicity for its services issued by a third party, and which is intended to solicit business for it, complies with these rules.

The issues we have identified tend to fall into the following 2 categories:

• Failure to identify the advertiser

All advertising should contain information that enables the viewer to identify the CMC without clicking the advert itself. It should be clear who the advert relates to from the content displayed, for example, a trading name of the CMC in the branding text of the advert. 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.

• Misleading headlines

Some adverts also contain misleading headlines or sensational language. Headlines typically seen in these ‘clickbait’ type adverts include “Try this brilliant new trick to find out if you have a PPI claim”, “Find out in 30 seconds if you have a PPI claim” and “Look up your name to see if you get a PPI payout”. We would deem claims of this nature to be misleading.

Client Specific Rule 2 states that all advertising, marketing and other soliciting of business must conform to the relevant code, which in this case is the UK Code of Non-broadcast Advertising and Direct & Promotional Marketing (CAP Code)

Failure to comply with the advertising codes, including not taking into account relevant adjudications, is a breach of the rules which may result in further action being taken.

1.4 Plevin guidance for CMCs

The Regulator has previously issued guidance for CMCs in regard to Plevin cases which covers:

• Clarity and transparency in marketing and communications with clients
• Obtaining instructions and using information already held
• Eligible Plevin cases
• Referring complaints to the Financial Ombudsman Service (FOS)

Some issues have been identified with the marketing and the quality of Plevin complaints, and we therefore advise that CMCs handling PPI claims revisit the above guidance.

2. Other CMR news and updates

2.1 New rules and guidance

On 20 March, the CMR published revised conduct rules and supporting guidance. The Conduct of Authorised Persons Rules 2018 came into force on 1 April 2018, replacing the Conduct of Authorised Persons Rules 2014. The rule changes were first announced in November 2017 in the Claims Management Regulation special bulletin: new fee cap measures. Additional measures include:

• Ban on upfront fees in relation to PPI and other financial claims
• Ban on any charges to a consumer where it is identified that the consumer does not have a relationship or relevant policy with the lender
• Requirement for CMCs to ensure that all cancellation charges are reasonable and to provide consumers with an itemised bill setting out details of what the cancellation charges relate to.

2.2 Financial Guidance and Claims Bill

Report Stage and Third Reading of the Bill in the House of Commons was scheduled for 12 March and then 27 March but on both occasions was postponed due to other urgent Parliamentary business. A rescheduled date is to be announced. HM Treasury are shortly due to be publishing a consultation on the draft secondary regulations which we will distribute by way of a special bulletin.

2.3 Unsolicited Communications Enforcement Network

The ICO published a press release in relation to the Unsolicited Communications Enforcement Network (UCENet), a global intelligence-gathering operation involving nine agencies from five countries in which CMR were involved. The operation visited 902 websites and examined 6,536 consumer complaints related to affiliate marketing in their respective databases. The issues found included lack of self-regulation, lack of consent, misleading advertising, and affiliate marketing platforms.

2.4 Recent enforcement action

We will be publishing our latest enforcement report for Q4 2017/18 (January to March 2018) shortly. Read our previous report summarising the action taken against CMCs in breach of the rules during Q3 2017/18 (October to December 2017).