The Claims Management Regulator at the Ministry of Justice (MoJ) has warned of a number of claims management companies (CMCs) who are mis-representing the services they offer in some way.

This mis-representation centres around two main issues. Firstly, some CMCs are contacting prospective customers saying they can offer them a ‘financial review’, when in fact all they can offer is a claims management service. The phrase ‘financial review’ is normally associated with financial advisory firms who can offer advice in a range of areas such as protection, mortgages, pensions and investments.

Secondly, a number of CMCs are still reported to be sending marketing messages which falsely state that a specified sum of money is definitely available for the customer to claim. The message is often little more than a general marketing message, and the CMC cannot state with certainty at this stage that any claim would be successful, never mind know for sure the sum that would be due in compensation.

CMCs are reminded that promotional material and other information provided must be “clear, transparent, fair and not misleading”.

The MoJ also makes CMCs aware of a number of other areas of concern. CMCs have been warned that they must only request updates on the progress of complaints referred to the Financial Ombudsman Service in “exceptional circumstances”.

Some CMCs are said to be insisting that customers put complaints about their services in writing before they are looked at. The MoJ requires CMCs to investigate such complaints regardless of the form in which they are received, so complaints made by email, telephone or personal visit must be treated in the same way as if the same concerns had been raised in a letter to the CMC.

Finally, the MoJ warned CMCs to seek legal advice before using the logos or trademarks of any other firm. 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.

Failure to comply with the MoJ’s rules can result in enforcement action being taken. The MoJ took the ultimate step of withdrawing the authorisation of over 200 CMCs in 2013.

The regulatory landscape for CMCs is constantly changing. Recent months have seen the introduction of new rules, the MoJ gaining the right to use a wider range of enforcement penalties and the MoJ taking on additional staff to give it more resources to supervise CMCs. Now is therefore a good time for CMCs to have an external audit of their practices and procedures to ensure they are meeting their requirements.