A London-based firm has acquired the dubious honour of becoming the first claims management company (CMC) to be subject to enforcement action since the Financial Conduct Authority (FCA) took over as regulator of the claims sector.
The former Claims Management Regulator (CMR) at the Ministry of Justice (MoJ) decided to impose a £70,000 fine on the firm in December 2018, on the grounds that its marketing materials were misleading. The firm appealed to the First-Tier Tribunal, but now that their appeal has been dismissed, the FCA has instructed the firm to pay the fine.
The principal area of concern was that the firm’s websites and printed materials prominently used the logos of five major banks. The regulators believe that the way in which these communications were presented could have misled consumers into believing they were submitting redress claims for mis-sold payment protection insurance (PPI) directly to the banks. This was especially true as the firm used website addresses such as www.barclays-ppi.co.uk. Then, in response to their enquiries, customers were sent claims forms that prominently displayed the name of the bank, with the name of the CMC displayed less prominently. The firm withheld some pages of the claim form when the CMR asked to see a copy during its investigation.
The FCA also comments that, when the firm submitted cases to the Financial Ombudsman Service, it was using identically worded replies instead of tailoring the communication to reflect the customer’s individual circumstances.
Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, said:
“CMCs have an important role to play in helping to secure compensation for their customers. This is especially true in the case of those consumers who might not otherwise make a claim.
“[name of firm]’s misleading website and marketing material suggested [name of firm] was associated with the five banks when this was not the case. Claims management firms must ensure their advertising is accurate. Not only in terms of what they say about themselves and their services but also in terms of what is represented.”
The following day saw another FCA announcement about a CMC who had been unsuccessful with an appeal to the Tribunal. This firm will now pay a £91,000 fine to the FCA after it failed to check that recipients of marketing texts had given the appropriate consent. The CMC also copied customer signatures without their permission.
Mr Steward said of this firm:
“The failure by [name of firm] to take previous advice and warnings from the former claims management regulator and the firm’s repeated use of consumer data and customer signatures without their consent are clear examples of a firm falling short of the standards we expect.
“The decision by the Tribunal to uphold the findings of the CMR is another important message to industry that firms must conduct all business with integrity and due care, skill, and diligence.”
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