At present, the Claims Management Regulator at the Ministry of Justice (MoJ) does not have the power to impose fines and bans on individual senior managers, and its enforcement actions are instead likely to be taken against the claims management companies (CMCs) themselves. This contrasts with the regulatory regime operated in financial services by the Financial Conduct Authority (FCA), where any individual holding a ‘controlled function’ can themselves be fined, or can be banned from working in the industry for any firm.

However, directors of CMCs would be wrong to assume that there will never be any personal consequences if their companies break the relevant rules and legislation. This was illustrated in April 2017, when the Insolvency Service banned Dean Anthony Spencer from acting as a director of any company for a period of ten years.

Mr Spencer was the director of Swansea-based Claim and Gain, a CMC that specialised in handling payment protection insurance and other financial mis-selling claims. His company repeatedly failed to provide the promised service to its clients, and took upfront fees from clients without their permission. Even though the MoJ warned the company about its practices, it proceeded to take upfront fees from a further 149 clients.

The company’s actions were said to have constituted a breach of Regulation 22 of the Compensation (Claims Management Services) Regulations 2006.

Insolvency Service investigations group leader Robert Clarke said:

“When company directors do not comply with legislation that is designed to protect customers and avoidable losses result, The Insolvency Service will seek lengthy periods of disqualification.

“This should serve as a warning to other directors who may feel tempted to breach customer protection legislation. The Insolvency Service will rigorously pursue directors who deliberately mislead and breach the trust of customers.”

Claim & Gain has been placed in liquidation, with debts totaling more than £650,000.

This latest action by the Insolvency Service comes just one month after Christopher Ross White, the sole director of CMC Rock Law Limited, was disqualified from acting as a director for a period of nine years.

Their reasons for disqualifying Mr White included:

• Forcing clients to enter into contracts during the initial sales call, before they had been given time to consider the documentation
• Inadequate monitoring of the company’s sales agents
• Insufficient training being given to staff
• Failing to maintain appropriate records and audit trails

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.