On October 2 2015, Swansea-based claims management company (CMC) Rock Law Limited became the second company to receive a fine from the Claims Management Regulator at the Ministry of Justice (MoJ).
Payment Protection Insurance claims company Rock Law has been fined £567,423, largely for what appear to be irregularities in its contracts with clients.
When it releases information about companies it has taken action against, the MoJ does not give specific details of a company’s individual failings. However, the notification on the MoJ website states that Rock Law breached Client Specific Rule 11 of the Conduct of Authorised Persons Rules 2014. Rule 11 covers entering into contracts with clients, and the provision of pre-contractual information.
This rule requires companies to have clear and not misleading standard terms and conditions for all contracts, and to publish these terms and conditions on the company website. No payments may be taken from a client until a legally binding contract has been signed.
The following information must also be provided to the client in a durable medium (i.e. in writing or electronically, in such a way that the client can refer back to the information as required) before any contract is entered into:
• The risks the client faces in making a claim, including the risks of losing money or having legal proceedings taken against them
• A clear description of the services the CMC will provide
• The procedures the CMC will follow in servicing the client
• Any contracts that a client will be asked to agree to, including insurance policies and loans
• The charges the CMC will impose on the client, with a cash example given where any charge is expressed as a percentage
• Any referral fees the CMC has paid in connection with the client’s claim, or any other payments made to third parties for introducing the claim
Rock Law also breached the following sections of the Conduct of Authorised Persons Rules 2014:
• General Rule 1 – A business shall conduct itself with honesty and integrity
• General Rule 2d – A business shall conduct itself responsibly overall including, but not limited to acting with professional diligence and maintaining appropriate records and audit trails
• General Rule 5 – A business shall observe all laws and regulations relevant to its business
• Client Specific Rule 1c – A business shall ensure that all information given to the client is clear, transparent, fair and not misleading
In addition to the fine, the MoJ has imposed conditions on Rock Law’s authorisation. The company must wait 24 hours from the later of the initial sales call and the time the pre-contractual information is provided before it enters into a contract with a client, or asks for a client’s payment details. The company must also record all calls made to/by clients or potential clients, and retain these recordings for six months.
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.