The Claims Management Regulator at the Ministry of Justice (MoJ) has published details of its enforcement activities during the second quarter of 2017. Although only two claims management companies (CMCs) had their licences cancelled between April and June, and only one more company received a fine, a further 77 companies were warned about their business practices. 15 new formal investigations were opened – 11 concerning CMCs that are authorised by the MoJ and four concerning companies suspected of operating in the claims sector without authorisation.

The two companies to lose their permissions were Your Money Rights Limited and Barrington Claims Limited.

Some of the reasons why Your Money Rights was stripped of its authorisation are similar to the reasons the MoJ has taken action against other CMCs, however in this case the company also failed to co-operate with the regulator’s efforts to supervise the company. Your Money Rights breached General Rule 11 of the Conduct of Authorised Persons Rules 2014, which stipulates that companies must comply with the MoJ’s monitoring and enforcement arrangements. It also failed to observe General Rule 16, which requires CMCs to notify the MoJ within 20 working days if any of the information they provided in their authorisation application subsequently changes. Rule 16 also asks that any additional information which the Regulator requests from a company is also supplied within 20 working days. The Rule adds that the information provided ‘must not be false or misleading’.

The company was also said to have made misleading sales calls, to have engaged in high pressure selling and to have not given customers sufficient time to consider contracts before being asked to enter into them.

Barrington Claims Limited breached 12 separate areas of the Conduct of Authorised Persons Rules. These included Client Specific Rule 12, which forbids a claims company from stating or implying that their clients have a greater chance of success by pursuing a claim with them, compared to their chance of success were they to pursue a DIY claim.
Like Your Money Rights, Barrington Claims also made misleading sales calls, and did not give customers sufficient time to consider contracts.

The company fined during the three-month period covered by the bulletin was TDP Direct Marketing Limited. A fine of £6,600 was imposed for breaches of the rules relating to record keeping and obtaining leads.

The bulletin also highlights that it is now ten years since the MoJ started regulating CMCs. The bulletin contains a link to a special report that summarises the many changes that have occurred in claims regulation over that time., which include:

• 2008 – a requirement for CMCs to hold professional indemnity insurance came into force
• 2009 – the introduction of the Anonymous Reporting Hotline, where consumers can confidentially report concerns about CMCs
• 2013 – the introduction of the personal injury referral fee ban, and a new rule requiring companies to draw up formal written contracts with their customers
• 2014 – new requirements covering how companies can obtain leads, and on how CMCs must check claims have a reasonable chance of success before being submitted
• 2015 – customers with complaints about CMCs were able to refer these to the Legal Ombudsman for the first time

During the last 10 years, the MoJ has cancelled the licences of 1,387 CMCs and imposed fines totalling £2.8 million.

In the special report, head of claims regulation Kevin Rousell comments:

“With a decade of hard work behind us, a new and perhaps even more challenging period lies ahead. The planned move of regulation to the Financial Conduct Authority (FCA) will bring about an even stricter regime.”

Finally, the bulletin makes reference to the action taken by the Insolvency Service against Dean Anthony Spencer. Mr Spencer was disqualified from serving as a director of any company for ten years after his CMC, Claim & Gain Limited, misled its customers in a number of ways regarding the fees to be charged and the services to be provided in return.
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.