Regulation 

MoJ unit raids two rogue claims companies

MoJ unit raids two rogue claims companies

Two claims firms suspected of making thousands of nuisance calls and ripping off hundreds of vulnerable people have had their offices raided by the Claims Management Regulation Unit.

In a week of targeted enforcement action, investigators teamed up with police to raid and make arrests in connection with two businesses thought to be at the centre of large scale and sophisticated cold-calling operations, according to a statement.

Police arrested five people after a raid on a Swansea company which had been operating illegally without a licence.

It is believed to have conned the public out of hundreds of thousands of pounds through misleading marketing calls, taking one-off payments in excess of £500 from vulnerable consumers.

CMRU officers later worked with police to raid a company in central Birmingham, which bombarded people with hundreds of calls a day about claims for payment protection insurance.

The firm is believed to be linked to numerous other businesses operating in a network of unlicensed claims companies.

Officers seized computer equipment and documents for further investigation.

Those arrested have been released on conditional bail pending further investigation into criminal charges.

The raids and arrests are the latest moves to clean up the claims industry by the CMRU, which regulates companies that offer to help people claim compensation for mis-sold financial products.

Head of claims management regulation Kevin Rousell explained his unit’s intelligence suggested that these people wanted to defraud the public.

“Firms should be in no doubt that if you attempt to operate outside the law and take advantage of vulnerable people - we will seek the most severe sanctions available.”

The industry regulator also announced that it has fined a company £315,000 for serious breaches of its rules of conduct. Bournemouth-based Elkador Finance failed to prove claimant data was legally obtained, despite clear requirements set by the regulator.

The fine brings the total of penalties issued by the CMRU to more than £2m. Since 2007 all companies offering claims management services have to be registered and licensed with the CMRU.

However, in March the government confirmed it is switching the regulation of claims management companies to the Financial Conduct Authority, after a review found the CMRU lacked sufficient powers and resources to supervise the market properly.

The Association of Professional Financial Advisers called for tougher regulation to stem spurious and fraudulent complaints brought to the ombudsman by claims firms.

It supported proposals put forward by the Ministry of Justice - including capping completion fees at 15 per cent - but said more needs to be done to crack down on vexatious complaints.

peter.walker@ft.com

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