On August 14 2014, the Claims Management Regulator at the Ministry of Justice (MoJ) issued an update on its enforcement activities.

The MoJ revealed that, in the second quarter of 2014 (April to June), it visited 29 claims management companies (CMCs), carried out 124 audits, commenced 25 investigations into regulated CMCs, issued 136 warnings, cancelled the licence of two companies and refused one authorisation application.

The report goes on to reveal that the MoJ is particularly concerned about the activities of CMCs active in financial services, including those who handle payment protection insurance mis-selling claims. In this area, it has warned companies over matters such as: accepting business from unauthorised companies, issuing generic claim letters and submitting claims without taking time to substantiate them.

Mention was also made of financial CMCs who were failing to meet the rules regarding processing of claims and website marketing. A number of investigations in this area are ongoing, and one company, Morgan Bentley Ltd, lost its authorisation in June 2014 as a result of breaches of the rules in these two areas.

With regard to unathorised use of trademarks, the MoJ said it may take enforcement action against companies. It is not uncommon for a CMC’s website to list banks and other firms that they have pursued claims against, and sometimes the logos of the firms in question are displayed alongside their names, but this must be done in accordance with the law.

The next section of the report deals with unsolicited marketing messages. The MoJ has increased the number of checks it carries out on this issue, and is investigating two companies as a result. CMCs are reminded of the May 2014 special bulletin on this issue which covered issues such as: not calling persons on the Telephone Preference Service register; only sending text, email and automated voice marketing messages to those who have consented to receive them; and clearly identifying the name of the company and the nature of its services at the outset.

Finally, the report gives details of the actions the MoJ is taking to enforce the referral fee ban in personal injury cases, and the steps it is taking to combat data fraud.

New rules for CMCs will take effect on October 1 2014, and guidance on application of these new rules will be issued by the MoJ in September 2014. These rules include: a requirement to establish that claims have a realistic chance of success before submitting them, new obligations to provide evidence to back up claims and the need to conduct thorough audits of data obtained, e.g. sources of marketing leads.