In his 2015 summer Budget speech, the Chancellor of the Exchequer signalled that significant changes could lie ahead for the UK’s claims management companies (CMCs).
George Osborne MP announced that a task force is to take a wide-ranging look at the regulatory system CMCs currently operate under. Carol Brady, chairman of the Chartered Trading Standard Institute board, will lead the working party, which will report to the Treasury and the existing claims management regulator the Ministry of Justice in early 2016.
Russell Atkinson, chief executive of personal injury CMC National Accident Helpline, largely welcomed the announcement. He commented:
“We welcome the review into the regulation of CMCs to ensure that the whole industry adheres to professional and ethical standards
“National Accident Helpline has been working hard to drive up standards in the sector, through initiatives such as our Stop Nuisance Calls campaigns, and has been working proactively with government through the Insurance Fraud Taskforce.
“We look forward to working with the government to ensure the practices of CMCs are in the best interest of consumers and access to justice is not impaired.”
The Government will also consult on proposals for a cap on the charges CMCs can impose. Mr Osborne suggested that making it less attractive for CMCs to operate would reduce the number of cold calls being received by householders.
Alan Nesbit, chairman of the trade association the Association of Regulated Claims Management Companies, suggested that a cap at a “reasonable or fixed rate” could be appropriate, especially for payment protection insurance claims.
Other reports in the wake of the Budget speech suggest companies could be banned from withholding their number when making marketing calls.
Whatever the outcome of the review, the regulatory landscape for CMCs has changed significantly in recent years, and further changes can be expected. Some of the changes that have already been announced include:
• A ban on personal injury referral fees
• New rules for CMCs, with additional requirements regarding: investigating the merits of a potential claim, maintaining records, ensuring date from third parties is obtained legally and having competent staff and management
• Fines of up to 20% of a company’s turnover in case of misconduct
• The facility to refer CMC complaints to the Legal Ombudsman if clients disagree with the company’s resolution of the issue
• Plans to make it easier to punish firms who make nuisance calls. Under the new plans, fines can be imposed simply because the communications cause ‘annoyance, inconvenience or anxiety’
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.