Regulation  

Second prong of CMC clampdown launched

Second prong of CMC clampdown launched

Clampdown on claims management companies’ behaviour is set to come under further scrutiny with the Legal Ombudsman set to accept complaints about claims management companies from today (28 January), following thousands of complaints made about CMCs last year.

Around 9,000 complaints were made to the regulator about CMCs last year but until now consumers have been unable to seek help.

The Legal Ombudsman now has powers to order compensation, make firms reimburse costs or to provide other forms of suitable redress where it finds there has been poor service. It is free for consumers who wish to complain about their legal service provider.

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In the last year 2013/14 the Claims Management Regulator dealt with 10,500 consumer contacts. About 82 per cent (8,700) of these were classed as complaints, the ombudsman said.

As well as helping customers to get their money back and to resolve issues around poor service, the scheme hopes to improve the industry’s reputation by monitoring recurring problems and working with firms and the regulator to address underlying causes.

FTAdviser revealed at the end of December claims firms responsible for providing bad service, or bombarding people with nuisance calls, will be issued financial penalties under new powers given to the Ministry of Justice.

The form is available online for people to supply information to the regulator for its investigations of alleged misconduct. Consumers who want to make complaints should contact the Legal Ombudsman.

Simon Tunnicliffe, the Legal Ombudsman’s head of CMCs, said: “We are really looking forward to working together with the industry and regulator to help improve standards.

“We have put information on our website to help claims management firms understand our new role and improve their complaint handling procedures.”

Lord Faulks, justice minister, added: “People should not have their time wasted by the poor services of some claims firms.

“The new complaints service will make use of the Legal Ombudsman’s expertise and provide a new avenue for redress for those who have received poor service. Our work to drive out poor standards and practices has made a clear impact, with benefit to consumers.”

The change will enable the Claims Management Regulator to focus its resources on working with the industry to improve standards and take wider action against CMCs that consistently break the rules.

Kevin Rousell, head of the regulator, said: “This is a win for consumers and provides another tool to help stamp out malpractice in the industry.

“We will work in partnership with the Legal Ombudsman to root out those CMCs that take advantage of consumers.”

peter.walker@ft.com

Additional reporting by Donia O’Loughlin