Number of CMCs continues to shrink

Latest figures released by the Government have shown a further retraction in the number of claims management companies (CMCs) involved in personal injury work.

CMCs registered to handle PI claims have fallen from 2,435 in March 2012 to 1,700 in June 2013.

The Ministry of Justice's Claims Management Regulation (CMR) unit says that the banning of referral fees have had a strong effect on the sector by rooting out rogue CMC operators.

Since April. the unit has visited more than 450 CMCs in England and Wales – leading to a further investigation of 141, action taken against seven, and 13 having to surrender their licence to trade.

In addition, the crackdown has also led to four companies being discovered trading without authorisation.

Kevin Rousell, head of the CMR unit, said that it was the unit's absolute priority to protect the public. “We are making certain that firms are following the rules at a time of major change for the claims management industry,” he said.

“We do not tolerate bad practice and continue to take action against companies which break the rules, including removing their licence to trade. We shut down more than 200 last year.”

The annual report also the regulator cancelled the trading licences of 211 CMCs involved in PPI mis-selling, audited 129 and issued formal warnings to 285.

Andrew Greenwood, a partner and personal injury law expert at Leeds-based Emsleys Solicitors, said that net was closing in on substandard legal practice, but more needed to be done by both the Government and the industry as a whole to improve the sector.

“In the 28 years I have worked in personal injury, representing victims of serious brain and spinal injuries, I have seen standards in some quarters deteriorate massively,” he said.

“Personal Injury lawyers are supposed to be there to help and support victims at the time they need support the most; too often firms are using unqualified and inexperienced claims handlers who are incentivised to settle quickly; this isn’t in the best interest of the victim.”

The CMR unit has now shut down more than 900 firms since being set up in 2007. Further details about the unit's policing of the sector can be viewed here. 

Mark Dugdale