The Claims Management Regulator at the Ministry of Justice (MoJ) has imposed special conditions on its authorisation of Camarthen-based Theclaimteam.com Ltd, after the company was found to have breached numerous rules.

The company must now not only follow all of the MoJ’s usual rules, but must also do three things not normally demanded of claims management companies:

1. The company cannot now take a fee from a client until the individual in question has received their redress payment. The amount of this fee, plus any fee the client also has to pay to a third party, must not exceed the amount of the redress payment.
2. The company must not enter into a legally binding contract with a client, or ask for a client’s payment details, until at least 24 hours after both the initial sales call to the client and the time at which pre-contract information is provided to the client.
3. All calls with both clients and prospective clients must be recorded. The company must retain these recordings for at least six months, and provide them to the MoJ if it so requests.

These conditions were imposed after Theclaimteam.com breached six different sections of the MoJ’s Conduct of Authorised Persons Rules 2014. The rules breached by the company were:

• General Rule 2d –the requirement to maintain appropriate records and audit trails
• General Rule 5 – the generic requirement for a firm to comply with all relevant laws and regulations
• Client Specific Rule 1a –another fairly generic rule, one that simply asks that companies treat their clients fairly and reasonably
• Client Specific Rule 1c – the need to ensure information given to clients is ‘clear, transparent, fair and not misleading’
• Client Specific Rule 3 – the prohibition on high pressure selling
• Client Specific Rule 11 – the need to ensure contracts between a company and their clients are signed by the client, together with the rule that prevents fees being taken before the contract has been signed

Rule 11 also specifically requires companies to provide the following information to the client in a durable medium before a contract is agreed:

• The risks of making a claim, including the risk of losing money, or the risk of being subject to legal action
• The nature of the service to be provided
• Any additional contracts, such as for insurance or loans, that the client will be requested to enter into
• The company’s charges, giving a cash example if this is calculated on a percentage basis
• Details of any referral fees paid

Irregularities over contracts with clients was cited was a reason for the MoJ cancelling the authorisation of Falcon & Pointer Limited, and its imposition of a fine on Rock Law Limited.

Claims management companies are advised to look closely at the reasons why some companies have been subject to MoJ action in recent months and years. If they have any concerns about whether they could be guilty of similar failings, then they need to take urgent corrective action, seeking professional advice where necessary.

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.