The Claims Management Regulator at the Ministry of Justice (MoJ) has fined claims management company (CMC) Zebra Claims Limited £68,000. Like many recent cases in which the MoJ has taken enforcement action, the company was in breach of the rules regarding marketing practices.

The Bolton-based company, which handles personal injury claims, breached six different sections of the Conduct of Authorised Persons Rules 2014:

• General Rule 2d – the need to maintain appropriate records and audit trails
• General Rule 2e – the requirement to take reasonable steps to ensure that any referrals, leads or data obtained from third parties were sourced in compliance with the appropriate rules and legislation
• General Rule 4 – the stipulation that all staff employed by a CMC, and anyone who works on its behalf, must possess the necessary competence to carry out their role, and must have received appropriate training
• General Rule 5 – which simply asks that companies observe all relevant laws and regulations
• Client Specific Rule 4 – which prohibits cold calling in person, such as calling door-to-door or stopping people in the street; and which asks that all telephone, email, fax or text marketing complies with the Direct Marketing Association’s Code and any related guidance issued by the Association
• Client Specific Rule 9 – which obliges the authorised CMC to verify that marketing activity conducted on its behalf by a third party is performed in accordance with the relevant rules

General Rule 2e and Client Specific Rule 9 both refer to the marketing activities of third parties that a CMC might engage. A number of CMCs have now been fined, or had their authorisation withdrawn, after they effectively outsourced marketing activity to third parties. Common practices in this area include the third-party marketing firm supplying the CMC with a list of possible customers to contact, or actually making marketing calls or sending marketing texts on the claims company’s behalf. In the first instance, the CMC cannot rely on the assurance of the marketing company that all persons on the list have agreed to be contacted. In the second instance, the CMC must not assume that the marketing company will only make calls and/or send texts to those who have consented to receive them. In both cases, the authorised claims company must conduct its own checks to ensure compliance. If the marketing company breaches applicable rules and/or legislation, then the MoJ will hold the authorised CMC responsible.

The key marketing rules that CMCs must follow are:
• Cold calling in person (as defined above under Client Specific Rule 4) is not permitted in any circumstances
• Live marketing telephone calls cannot be made to anyone who is registered with the Telephone Preference Service, or who has previously informed the company they do not wish to receive marketing calls
• Automated marketing telephone calls and marketing texts can only be made/sent to persons who have explicitly consented in advance to receiving communications of this type

The company is also said to have breached the rule relating to staff training and competence. As in any regulated industry, individuals working for a CMC need to understand their role, and the regulation relating to it.

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.