In late July 2016, the Claims Management Regulator at the Ministry of Justice (MoJ) published its Annual Report for the 2015/16 financial year.

It begins with a statement from Kevin Rousell, the head of claims regulation. He describes the year as one which “brought many difficult compliance and policy challenges and a fundamental examination of claims management regulation and its future.” He went on to say that much of his organisation’s enforcement activity during the year concerned non-compliant marketing practices, made reference to the Government’s decision to cap the fees claims management companies (CMCs) can charge, and spoke of the decision to transfer claims management regulation to the Financial Conduct Authority (FCA) from 2018.

The year saw 66 CMCs have their licence cancelled, while 247 more received warnings. Fines totalling £1.7 million were imposed on four companies. Another noteworthy statistic is that in 2015/16, seven prospective CMCs had their applications for authorisation refused, up from just two in both 2013/14 and 2014/15 – in spite of the fact that fewer authorisation applications were made in 2015/16 when compared to the previous two years.

Examples of enforcement action taken by the MoJ in 2015/16 included:

• Fines for making unsolicited marketing calls
• Fines for taking upfront fees without authorisation, and pressurising customers into signing contracts without giving them sufficient time to consider the terms and conditions
• Fines for using personal data without consent
• Withdrawal of authorisation for encouraging customers making personal injury claims to exaggerate their symptoms, and for falsely suggesting that compensation for their ‘accidents’ would definitely be available
• Initiating prosecutions, leading to fines in courts of law, for conducting claims management activity without authorisation

As explained above, the transfer of regulation to the FCA is still some two years away. The MoJ will therefore continue to regulate claims management activities throughout the 2016/17 financial year. It describes its priorities for this 12 month period under four headings: nuisance calls and texts, financial claims, personal injury claims and unauthorised activity:

• Nuisance calls and texts – the Regulator will continue to ensure CMCs take steps to verify that data has been obtained legally and compliantly; will continue to check that CMCs do not make marketing communications to customers who have not consented to receiving them; and will seek to identify companies who supply personal data without authorisation and/or CMCs who receive leads from these parties
• Financial claims – continued emphasis will be placed on the need for companies to conduct detailed fact-finding on their customers, in order “to present a specific and non-generic complaint to the relevant financial services provider”
• Personal injury claims – here the main priorities include ensuring compliance with the referral fee ban, ensuring telephone marketing does not pressurise consumers into making claims, and working with law enforcement agencies to combat fraud
• Unauthorised activity – identifying call centres who conduct claims management activities without authorisation

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.