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Financial claims chasers defy MoJ crackdown

The number of claims firms targeting financial complaints has risen since 2011 despite data published on Friday (21 February) showing that the number of claims chasers has fallen overall as a result of a crackdown by the Ministry of Justice’s claims management regulation unit.

According to a statement from the Ministry of Justice, its claims management unit closed 211 claims management firms for compliance failures in 2013. This brought the total number of firms shut to more than 1,100 since CMC regulation began in 2007.

The MoJ said this is part of a clampdown on bad practice by CMCs, including bombarding the public with misleading advertisements and cold calling.

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It added that this crackdown has contributed to a drop of the number of licenced CMCs active in the UK from a peak of 3,367 in 2011 to 2,254 in November 2013, representing a decline of more than 1,000 firms. Firms can carry licences for more than one CMC activity.

However, while the number of licenced personal injury claims firms fell steadily between March 2011 and November 2013 from 2,553 to 1,388, the number of financial claims firms actually increased over that time from 946 to 1,118. The number of financial CMCs has, though, fallen slightly from a peak of 1,155 in March 2013.

The Ministry of Justice last year launched two consultations which could make life more difficult for claims management firms by introducing new rules discouraging frivolous claims, and imposing fees across the industry similar to those paid by advisers.

Kevin Rousell, head of the claims management regulation unit, said: “We have made it very clear that it is our absolute priority to protect customers and help organisations and businesses that are on the receiving end of high volumes of speculative claims which can clog up the system.

“We are making certain that firms are following the rules at a time of major change for the claims management industry.”