18Jun

We may now know that there will be a change of claims management regulator on April 1 2019, with the Financial Conduct Authority’s tougher regime due to commence on this date. However, up until next April the Claims Management Regulator at the Ministry of Justice (MoJ) will continue to take action against companies who fail to meet their regulatory obligations.

The early days of June 2018 have seen the MoJ give details of action taken against two claims management companies, both based in Swansea and both active in the financial claims arena. In both cases the regulator has imposed the most serious sanction available – removing the companies’ authorisation to carry out claims management services.

The only sections of the MoJ rulebook breached by both companies were:

  • General Rule 5 – the over-riding requirement to observe all relevant regulations and laws
  • Client Specific Rule 1a – the general obligation to act fairly and reasonably in dealings with clients
  • Client Specific Rule 1c – the need to ensure all information provided to clients is is clear, transparent, fair and not misleading

The other rules breached by the first company were:

  • General Rule 2d – the need to maintain appropriate records and audit trails
  • General Rule 8 – which requires companies to operate a complaints scheme that meets the MoJ requirements
  • Client Specific Rule 2 – which requires that promotional activity complies with relevant legislation and codes of practice
  • Client Specific Rule 18 – the need to keep clients informed of the progress of their claim
  • Complaints Handling Rule 10d – the stipulation that responses to client complaints must address adequately the subject matter of the complaint and appropriate redress should be offered where appropriate
  • Complaints Handling Rule 15 – the requirement for companies to co-operate with the Legal Ombudsman when complaints are referred to that organisation
  • Complaints Handling Rule 16 – the need for companies to comply with requests from the Ombudsman for information and/or documentation
  • Complaints Handling Rule 17 – the requirement that companies must accept any instructions made by the Ombudsman, such as an instruction to pay redress to a particular client

The other rules breached by the second company were:

  • General Rule 11 – which asks that companies comply with the MoJ’s efforts to supervise and regulate them
  • Client Specific Rule 6d – which prevents companies from stating that they have been approved by the Government or are connected with any government agency or any regulator
  • Client Specific Rule 12 – the stipulation that companies cannot state or imply that using their services will improve the client’s chances of a successful claim
  • Client Specific Rule 15 – the requirement to give clients a 14 day ‘cooling off’ period after signing any agreement

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