MOJ set to use new powers to fine CMCs
Claims firms which are responsible for providing bad service, or bombarding people with nuisance calls, can now be issued financial penalties under new powers in the claims management regulation unit at the Ministry of Justice.
Under the new powers, regulated claims management companies which breach the rules can be penalised financially, alongside the existing sanctions of having their trading licence suspended or removed.
Examples of rule breaking include using information gathered by unlawful unsolicited calls and texts; wasting people’s time and money by making spurious or unsubstantiated claims and using misleading marketing.
Firms’ penalties will be based on the turnover of the company involved and the nature of the offences.
Larger claims firms penalties could be up to 20 per cent of their annual turnover, meaning that there is a real possibility they could add up to hundreds of thousands of pounds and potentially millions in some cases.
The move follows claims management firm EMC Advisory Services receiving a £70,000 fine in November from the Information Commissioner’s Office for making “hundreds” of nuisance calls, after ignoring a warning issued in 2013.
The company was responsible for 630 complaints to the commissioner and the Telephone Preference Service between 1 March 2013 and 28 February 2014.
Justice minister Lord Faulks warned that people should not have to have their time wasted by the unscrupulous practices of some claims firms out to make themselves a profit at others’ expense.
“We are making sure they will have to pay the price themselves if they engage in this kind of behaviour.”
Kevin Rousell, head of the MOJ’s unit responsible for carrying out the enforcement, said the penalties are a key measure to tackle the companies whose bad practice plagues the reputation of the claims management industry and causes serious inconvenience to the public.
“Reducing malpractice will also help to improve the reputation of those firms who do adhere to the rules and provide a good service to consumers.
“The new penalties are the latest in a series of moves by the government to rid the industry of bad firms, which already includes appointing additional enforcement staff, banning firms from taking fees from customers before a contract has been signed and naming firms which are subject to enforcement action or under investigation.
He added: “Claims firms subject to investigation or a penalty are also no longer able to surrender their licence without explicit consent from the regulator. This means that claims firms cannot simply surrender their licence to avoid enforcement action.”
ruth.gillbe@ft.com
