27Mar

The Solicitors Regulation Authority (SRA) has issued its biggest ever fine of £124,436 after a Hertfordshire-based law firm sent around six million misleading letters over a 10-month period regarding payment protection insurance (PPI) claims.

The failings identified by the SRA include:

  • Sending the letters in plain envelopes on which was printed: ‘Important information enclosed’ and ‘Authorised and Regulated by the Solicitors Regulation Authority’, which may have created a false impression that what was enclosed was a vital communication
  • Stating that the firm employed ‘professional forensic investigators’, when in fact none of its staff held the job title of ‘investigator’
  • Claiming that the existence of a PPI policy could not be hidden from its ‘professional forensic investigators’, but at the time the firm did not employ anyone with the job title of investigator.
  • Having no process in place to verify who was instructing the firm – on one occasion the firm thought it was acting for a particular client when in fact it was taking instructions from a third party who was impersonating them. The person who was actually entitled to make a claim, and by whom the firm thought it was being instructed, had in fact died some years earlier

The SRA code of conduct states that all marketing must be ‘accurate and not misleading’.

The Authority notes in mitigation that the firm:

  • Co-operated fully with its investigation – as with many other regulators the fine was reduced by 20% in recognition of this
  • Has upgraded its IT systems
  • Has amended the marketing letters it now sends out
  • Has adopted new procedures for electronic verification of clients

Law firms regulated by the SRA are not permitted to cold call prospective clients in the same way that a claims management company might attempt to secure business.

An SRA spokesperson said:

“The fine we have agreed with [name of firm] is substantial and is our largest ever. It reflects the millions of letters with misleading information that were sent out across the UK and that this was no isolated incident.

“However, after the misconduct was discovered, the firm co-operated fully with us and has changed its processes accordingly to make sure this does not happen again.

“The deadline for making PPI compensation claims is now only six months away, so marketing activity will doubtless increase. We are clear that all firms involved in this work must adhere to the standards we set – we will take robust action if we are given evidence of misconduct.”

A spokesperson for the firm said:

“We understand that out of six million marketing letters we sent, seven resulted in complaints to the SRA. We are grateful to the SRA for highlighting their concerns and for helping us improve our consumer communications. We now understand why our original communications were misleading in parts, but it is important to emphasise that no consumers were ever financially disadvantaged as a result.”

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