The Claims Management Regulator at the Ministry of Justice (MoJ) has imposed a fine of £70,000 on a Southend-based claims company. The reasons for the action include a failure to ensure the accuracy of information supplied to third parties.
In total, the specialist payment protection insurance (PPI) claims company was in breach of three sections of the MoJ rulebook:
- General Rule 2b – when making representations to a third party to substantiate and evidence the basis of the claim, these representations must be are specific to each claim and must not be fraudulent, false or misleading
- Client Specific Rule 1c – when information is given to a client this information must be clear, transparent, fair and not misleading
- Client Specific Rule 2 – all advertising, marketing and other soliciting of business must conform to the relevant code
In General Rule 2b, the ‘third party’ in question could be either the firm to which the original complaint was made, or the Financial Ombudsman Service (FOS). Whoever the third party is, all the information submitted should be accurate and not misleading and should be specific to the circumstances of the individual client and the circumstances of their claim. This means, for example, that it is not acceptable to issue the same generic information for every single PPI claim that a claims management company (CMC) might handle.
From April 1, CMCs will be dealing with the FOS in two ways. The FOS will continue to adjudicate on complaints about financial services firms where a client believes that the firm did not handle the complaint appropriately.
The FOS will also be able to investigate complaints made against CMCs by their clients. In this respect, the FOS will be taking over the role currently undertaken by the Legal Ombudsman. Complaints about CMCs handled by the Ombudsman might for example concern:
- Issues over costs and charges
- Whether the promised service has been delivered
- Delays in the claims process that could be the fault of the CMC
- Giving inappropriate or incorrect advice to customers
- Failing to keep the customer informed as to the progress of the claim
When the Financial Conduct Authority (FCA) takes over regulation of claims companies on April 1, the information published on enforcement notices will be much more detailed. Whereas the MoJ often simply lists the sections of its rulebook which the company has breached, FCA enforcement notices contain specific detail of the company’s wrongdoing. In the most serious cases, the FCA also issues a press release summarising the action it has taken. This means that other companies can In a sense use FCA notices as a compliance checklist, asking themselves if any of the same failings could conceivably apply to them as well.
The fine is at present a provisional penalty, as the company has announced it intends to appeal against the MoJ’s action.
The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article