31Oct

MOJ Issues Quarterly Enforcement Bulletin

Between July and September 2014, the Claims Management Regulator at the Ministry of Justice (MoJ) cancelled the authorisation of 16 claims management companies (CMCs) as a result of wrongdoing, and warned a further 48 companies. In addition, 25 investigations commenced during this period.

In its quarterly enforcement bulletin, the MoJ summarised the work it had carried out into four categories: payment protection insurance (PPI) and other areas of financial services, nuisance calls and texts, the personal injury referral fee ban and insurance fraud.

The bulletin says that:

“The practices of some CMCs specialising in financial claims, particularly mis-sold payment protection insurance (PPI), continue to concern consumers and the financial services industry.”

During the three month period, almost 20 CMCs that deal with PPI were warned. Issues ranged from marketing practices to complaints handling and quality of documentation (such as letters of authority and Financial Ombudsman Service forms). Six PPI companies lost their authorisation for failing to pay their authorisation fee, and investigations into six more companies commenced.

The MoJ revealed it has concerns about CMCs handling packaged bank account claims, and also reminded companies that the most recent changes to the Conduct of Authorised Persons Rules came into force on October 1. These new 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; the need to have procedures for dealing with vulnerable customers; and the need to conduct thorough audits of data obtained, e.g. sources of marketing leads.

Regarding nuisance calls and texts, the MoJ said it had warned seven companies engaged in lead generation, and that six investigations were ongoing. The regulator continues to work with the Information Commissioner’s Office in this area.

Since the release of the bulletin, the Government has announced that it plans to amend the Privacy and Electronic Communications (EC Directive) Regulations 2003, so that action can be taken against firms should their marketing communications cause ‘annoyance, inconvenience or anxiety’. At present, communications must cause ‘substantial damage’ or ‘substantial distress’ before action can be taken. All CMCs must take note of the proposed changes.

10 companies have been warned over the personal injury referral fee ban, with another 65 companies forced to amend their practices so that they are compliant. The bulletin also says that the number of CMCs handling personal injury claims has more than halved in the last 20 months, from around 2,300 in January 2013 to under 1,140 at the end of September 2014.

The regulator also revealed it is working with City of London Police and the Insurance Fraud Bureau regarding an ongoing investigation and an ongoing prosecution for insurance fraud.

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.