24Mar

Christopher Ross White, the sole director of Swansea-based claims management company (CMC) Rock Law Limited, has been disqualified from acting as a director for a period of nine years.

Payment protection insurance (PPI) claims company Rock Law entered liquidation in November 2015, owing £1,209,601 to creditors. The company’s debts included a £567,423 fine imposed by the Claims Management Regulator at the Ministry of Justice (MoJ).

CMCs can of course be fined, or have their authorisation cancelled, if the MoJ finds that they have failed to comply with the rules. However, this announcement from the Insolvency Service highlights how failing to comply with regulatory requirements can also have personal consequences for senior individuals within CMCs.

The reasons for disqualifying Mr White from acting as a director are essentially the same as the reasons given by the MoJ for imposing the fine back in October 2015, and include:

• Forcing clients to enter into contracts during the initial sales call, before they had been given time to consider the documentation
• Inadequate monitoring of the company’s sales agents
• Insufficient training being given to staff
• Failing to maintain appropriate records and audit trails

Sue Macleod, an Insolvency Service Chief Investigator of Insolvent Investigations, Midlands & West said:

“The Compensation (Claims Management Services) Regulations 2006 are there to ensure the general public is offered protection from over-zealous sales techniques by agents for companies operating within the claims management sector.

“Directors have a duty to ensure they exercise reasonable skill, care and diligence over company operations and that they do not allow the company to breach legislation resulting in financial penalties which impact upon the company continued success. This should serve as a warning to other directors who may feel tempted to breach legislation intended to serve as protection for the public.”

One piece of further news regarding PPI claims in recent days was the announcement of yet another increase in the amount set aside by Lloyds Banking Group to compensate victims of mis-selling. When the bank announced a £1 billion increase late last year, George Culmer, Lloyds’s finance chief commented:

“It would be the last big PPI provision that we would expect to take.”

However, it must be said that compared to the amounts Lloyds has already set aside, the March 2017 announcement of a further £350 million hike in the banking group’s compensation reserve probably doesn’t count as a ‘big’ provision. The latest increase takes Lloyds’ total provision for PPI to around £17.4 billion, a figure that includes provision for mis-selling by all of the Group’s companies, which include Halifax, Bank of Scotland and Black Horse Finance.

Lloyds blamed the latest increase on the Financial Conduct Authority’s announcement of a PPI claims deadline in August 2019, as well as the related announcement that PPI claims will soon be permitted on the grounds that a large compensation payment was not disclosed to the customer. It said that both the number of claims and the size of average compensation payouts had increased in recent months.

The bank’s latest PPI statement reads:

“The additional provision has been taken to reflect the estimated impact of the policy statement including the revised arrangements for Plevin cases, which includes a requirement to pro-actively contact customers who have previously had their complaints defended.”

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.