Much of the information in the March 2015 bulletin issued by the Claims Management Regulator at the Ministry of Justice (MoJ) is not new. But the fact that the MoJ has seen fit to re-iterate these points suggests they feel these are areas where many claims management companies (CMCs) are not meeting their obligations.

Firstly, companies are reminded of the system for paying their fees. The deadline for payment of the Legal Ombudsman fee expired on March 31 2015, and payment of the MoJ authorisation fee must be paid within one month of the date of the invoice. Failure to pay either fee will result in suspension or withdrawal of authorisation.

Next, companies are directed to certain information published by the Ombudsman about its complaints handling regime. Information is available by following the link in the bulletin to the Ombudsman website, and it is also holding professional learning events in Bristol and Manchester during June.

Companies are then reminded that it is a breach of the MoJ rules not to establish the merits of a client’s case before making a claim, and that enforcement action can be taken in these circumstances. Mention is made here of companies who fail to gather sufficient information from clients, who contact financial providers without checking with clients first, and who contact providers even where clients do not believe mis-selling has occurred.

The next section deals with providers who make direct contact with clients of CMCs. Some CMCs have been instructing clients not to deal directly with providers, or have been issuing threatening communications to providers to try and deter them from contacting clients. Both practices breach MoJ rules, and CMCs are asked to ensure they provide accurate, client-specific information when submitting claims, to reduce the likelihood the provider will need to contact their client.

Finally, the bulletin makes reference to the recently issued guidance on transfers of clients between CMCs; and announces that guidance will shortly be issued about marketing of CMCs’ services and about the personal injury referral fee ban.

One of the key ideas in the special bulletin on transferring clients was the need to keep them fully informed as to the progress of the transfer. Where the agreement a CMC has with a client does not specifically permit such transfers, clients must be informed that they have three options: decide to do business with the new CMC, find another CMC to represent them, or stop using a CMC altogether. If a new CMC takes them on as a client, then it must ensure a new Letter of Authority is obtained. CMCs also need to ensure they communicate with the MoJ, the providers the CMC is dealing with and the Financial Ombudsman Service regarding the transfer.

CMCs are reminded that the MoJ now has the power to fine them up to 20% of turnover for breaches of its rules, and also that the Information Commissioner’s Office can now has greater powers to fine companies who make nuisance marketing calls or send nuisance marketing texts. It can impose these fines merely if the communications cause ‘annoyance, inconvenience or anxiety’.

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.