During the first quarter of 2016, the Claims Management Regulator at the Ministry of Justice (MoJ) cancelled the authorisation of one claims management company (CMC), warned 84 others and commenced 13 new investigations into CMCs. During this period, 299 companies were visited by MoJ staff.

CMCs that take upfront fees, rather than simply taking a percentage of any compensation awarded, have been warned to expect close scrutiny from the MoJ.

Three of the new investigations concern CMCs who specialise in financial services, such as those handling payment protection insurance (PPI) and/or packaged bank account cases. 12 further investigations into companies in this area continue.

Regarding nuisance calls and texts, 15 warnings were issued, three new investigations were commenced and nine further investigations are ongoing. The one CMC to lose their authorisation during the period – Falcon & Pointer – made some 40 million automated nuisance calls over a three month period to promote its PPI claims services. Automated calls are only permitted where the recipient has given express consent to receiving them, and including an option within the call to decline future marketing calls is not sufficient.

Falcon & Pointer also pressured clients into signing contracts, and took payments, without allowing the clients time to understand the contract terms.

Later, the data protection watchdog the Information Commissioner’s Office (ICO) also took action against Falcon & Pointer. It fined the company £175,000 after some 5,535 complaints were received by ICO about its automated marketing calls regarding payment protection insurance claims.

The firm told the ICO in June 2015 that it had stopped making the marketing calls, yet the watchdog found evidence of the company making 2,475,481 calls in the two months following that. Many customers claimed the company were making calls in the middle of the night.

The company claimed the calls had been made by a third party, who had told them that all individuals who were phoned had consented to receiving calls, but this defence did not impress the ICO, who again stressed that companies cannot rely on third party assurances of this type, and must conduct their own checks. Automated calls can only be made to customers who have given explicit consent to receiving them.

A further nine CMCs active in the personal injury claims area were warned between January and March. The bulletin also gives details of ways the MoJ has co-operated with the police and with fraud prevention agencies regarding personal injury claims.

The most eye-catching piece of news from the first quarter, that affects the claims management sector, was a Government announcement that the Financial Conduct Authority will take over regulation of CMCs. Their tougher regulatory regime is expected to come into force within two years.

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.