Claims management companies have been warned by the Ministry of Justice for using misleading language when marketing to clients, including promoting their service as a formal “financial review” when in fact they are simply chasing for complaints around for example PPI.
The MoJ has today (3 June) published several papers in which it raises issues over among other things misrepresentation in direct marketing, complaints handling at claims firms, and unauthorised use of trademarks of other financial services businesses.
In particular the ministry’s Claims Management Regulator has found evidence firms are failing to provide “accurate information” about the services they provide when telemarketing, including stating that they offer a formal “financial review”, which mimics the language of advice.
Firms also frequently claim that a certain amount of compensation is available for the recipient of the message to claim, when in fact the message is often simply a speculative enquiry.
The CMR warns that when marketing to consumers, CMCs must ensure that all information provided is “clear, transparent, fair and not misleading”.
“Tackling non-compliance relating to direct priority is a key priority for the CMR [Claims Management Regulator]”, the MoJ said, adding that it has undertaking more risk-based marketing audits to identify, stop and prevent bad practice.
In addition the CMR warned that some CMCs are breaching CMC rules by hassling the Fos for updates on PPI complaints. Many enquiries are being made before deadlines for financial businesses to respond and timeframes for making payments to customers have expired.
The CMR said: “Such conduct is irresponsible and a potential breach of general rule 2. You should provide information about the process and timescales in order to manage clients’ expectations but should only chase progress... in exceptional circumstances.”
A separate bulletin warned that CMCs are failing to handle consumer complaints about their own service effectively, often for example refusing to deal with complaints over the telephone.
The CMR warned that its complaints handling rules makes it clear that effective procedures need to be in place to treat “any expression of dissatisfaction”, made orally or written, as a complaint.
The regulator warned that enforcement action will result if CMCs “insist that clients put their complaints in writing and/or fail to treat complaints made by telephone in accordance with your complaint handling procedures”.
The regulator also warned against CMCs using the intellectual property of trademark owners, such as banks.
The bulletin said: “We are aware some CMCs are using trademarks of other companies in their marketing. Examples include trademarks of banks, usually reproduced on websites of CMCs.
“The owner of the intellectual property may take action against you if they believe you are infringing their intellectual property rights. We advise that you seek legal advice before reproducing trademarks in marketing.”
