14Sep

The latest quarterly compliance bulletin from the Claims Management Regulator at the Ministry of Justice (MoJ) emphasises that claims management companies (CMCs) cannot use data protection concerns as an excuse for refusing to provide the Regulator with information it has requested.

It has emerged that some CMCs were suggesting that providing information to the MoJ, information which may have contained clients’ personal data, would be in breach of the General Data Protection Regulation. However, the MoJ now says it has liaised with the Information Commissioner’s Office, who have confirmed that this is not the case. In summary therefore, CMCs are expected to fully co-operate with the Regulator’s supervision programme, and to supply them with any information they request.

One of the legal bases for processing of data by companies is “processing is necessary for compliance with a legal obligation to which the controller is subject”, and provision of information to regulators falls into this category.

The bulletin also warns CMCs that they cannot adopt a policy of automatically referring to the Financial Ombudsman Service (FOS) all complaints that are rejected by a financial institution. This is said to be a particularly big issue in the payment protection insurance claims arena. The MoJ says it could take enforcement action against companies found to be adopting this practice.

Instead, CMCs are asked to examine the reasons the financial firm gives for rejecting a complaint. CMCs should then consider the reasons given, and their past experience of FOS judgements on similar cases and use this information to decide whether to refer the matter to the FOS. The bulletin also says that a complaint should not be referred to the FOS without the client being advised as to their prospects of success.

Claims companies are also reminded that they must now use the updated FOS complaints form in all cases, and that the old version of the form will no longer be accepted by the Service.

Payday loans is one area in which more CMCs have become active in recent months. The MoJ is calling on CMCs to take time to understand their client’s circumstances at the time of borrowing, before referring the complaint to the lender.

The bulletin also suggests CMCs should read a number of recently issued documents, including:

  • The 2017/18 Claims Management Regulation Annual Report
  • The general information published by the Financial Conduct Authority (FCA) regarding how it will regulate CMCs from April 1 2019
  • The FCA consultation paper on the fees it proposes to charge to CMCs
  • The Treasury’s response to the consultation on secondary legislation relating to the switch of claims regulation to the FCA
  • The MoJ’s report on the enforcement action it took between April and June 2018
  • The information published by the Legal Ombudsman about training courses

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