The Claims Management Regulator at the Ministry of Justice (MoJ) will cease to exist in less than eight months’ time, when the Financial Conduct Authority takes over as the regulator of the sector. However, the MoJ continues to take enforcement action against claims management companies (CMCs), and its latest quarterly enforcement bulletin shows that 13 companies had their licences cancelled between April 1 and June 30 2018.

MoJ staff visited 112 CMCs during the quarter, conducted 81 formal audits, issued 39 warnings and started one new investigation.

Although the August 2019 deadline for payment protection insurance (PPI) claims is fast approaching, the bulletin says it is still “the most active claims area in the financial claims sector with around £400m paid out each month in redress.” The bulletin also notes that some financial CMCs are assisting with claims regarding Packaged Bank Accounts, payday and other short-term loans, investments, pensions and mortgages.

The bulletin highlights that the MoJ is monitoring companies’ compliance with the interim fee cap in the Financial Guidance and Claims Act 2018. CMCs can no longer:

  • Charge a client a fee prior to the conclusion of a PPI complaint
  • Charge a fee where the client either did not have PPI, or was never a client of the lender in question
  • Charge fees for PPI complaints that are more than 20% plus VAT of the value of the claim

CMCs must also issue an itemised bill, explaining the work they have done, before imposing any cancellation fee.

In the financial claims section of the bulletin, the MoJ also highlights what CMCs can expect from an MoJ audit. These audits are likely to include inspection of client acquisition and sales, client paperwork, claim processing, complaints handling and other business processes.

In the personal injury, holiday sickness and housing disrepair sector, the MoJ says it continues to monitor compliance with the referral fee ban, and with its rules on marketing. It also says it has identified CMCs in this sector who are involved in suspected fraudulent and other criminal activity.

The next section of the bulletin describes nuisance calls and texts as being both “a concern to the UK public” and “a key compliance priority.” The MoJ says it is investigating 15 companies over suspected non-compliance in this area.

In the fight against unauthorised trading, the Regulator says it has made 80 unannounced visits in the last quarter to the premises of companies suspected of continuing to operate despite no longer being authorised. During the three-month period it also received “over 127 reports” of companies conducting claims management activity without authorisation.

Finally, the bulletin draws companies’ attention to the Regulator’s Annual Report, published on July 5 2018. Head of the MoJ regulatory unit Kevin Rousell introduces the report by saying:

“This was a year of positive regulatory action across all regulated claims management sectors, action aimed at safeguarding the interests of consumers, protecting the public and increasing the professionalism of CMCs. The proportionate statutory enforcement action we have taken, in particular financial penalties and cancellations, has been effective in tackling misconduct and has also stood the test of independent scrutiny with the First Tier Tribunal ruling in our favour in all eight statutory appeals made against our decisions.”

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