Kevin Rousell, the head of the Claims Management Regulator at the Ministry of Justice (MoJ), opens his organisation’s Annual Report for the 12 months to March 2018 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.”

Mr Rousell’s foreword to the Report also highlights:

  • The effective action the Regulator has taken against misconduct amongst holiday sickness claims companies
  • The action taken in rooting out bad practices associated with the acquisition and handling of personal injury claims
  • The intervention by the regulator into increased advertising by payment protection insurance (PPI) claims companies ahead of the claims deadline for this product

He looks forward to 2018/19 and says one of the main priorities in this financial year will be assessing whether claims management companies (CMCs) are correctly applying the new restrictions on the fees that can be charged – these new rules include a complete ban on upfront fees for PPI claims.

In the period covered by the Report:

  • 45 CMCs had their licences cancelled for misconduct
  • One more company had conditions imposed on its authorisation
  • 252 more companies were issued with warnings by the MoJ
  • A total of £279,050 in fines was imposed on six different CMCs
  • Seven warrants to enter premises and seize evidence were executed
  • Three applications for authorisation were refused
  • 199 licences were surrendered by companies
  • 367 audits were carried out

41 investigations were ongoing as of March 21 3018.

Additionally, while details are not given for this specific financial year, the Report reveals that since March 2017, 13 directors of CMCs have been disqualified from acting as directors, for a collective total of 102 years.

On a more positive note, the number of complaints made to the information Commissioner’s Office about nuisance calls by CMCs has once again reduced, with the rate of decrease accelerating in the previous 12 months. Nevertheless, the Report says this area “remains a key priority” for the MoJ. Despite the decline in complaints, the number of companies having their licence cancelled over this issue was five in 2017/18, compared to three in 2016/17 and just one in 2015/16.

Inevitably the Report concludes by making reference to the transfer of claims regulation to the Financial Conduct Authority, which will take place on April 1 2019. Companies have been warned to expect a tougher regulatory regime, with an increased focus on holding senior managers accountable for their actions. The transfer of regulation will also mean that CMCs in Scotland will be regulated for the first time.

Otherwise, the MoJ’s priorities for the year ahead include:

Nuisance calls and texts

  • Identifying and tackling companies that fail to comply with existing legislation, and with the restrictions on cold calling detailed in the Financial Guidance and Claims Act
  • Ensuring CMCs conduct adequate due diligence to satisfy themselves that data obtained from other parties has been obtained legally

Financial claims

  • Ensuring CMCs are complying with the new fees restrictions and the requirement for itemised invoicing when cancellation fees are charged
  • Tackling misleading marketing and high-pressure selling

Personal injury

  • Ensuring the referral fee ban is correctly applied
  • Identifying misleading marketing and instances of pressure being put on clients to exaggerate injuries
  • Working with other agencies to tackle fraudulent claims

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