Government issues call for evidence as it looks to review claims management company regulation

The Government has issued a call for evidence for a fundamental independent review of the way that claims management companies are regulated.

It has said that it wants to take action to curtail the behaviour of what it calls “rogue” claims management companies who provide bad services and are responsible for people being bombarded with nuisance calls.

It says that consumers, regulators, banks and insurers remain concerned that some CMCs continue to fuel speculative claims and create a significant social nuisance through unsolicited calls and texts, misleading marketing and high charges.

The review is being led by Carol Brady, chairman of the Chartered Trading Standard Institutes board. Brady is seeking evidence on how the claims management market is working, what improvements can be delivered through changes to regulation, and where other solutions may be required. The review is due to be completed by early 2016.

As announced in the Summer Budget in July, proposals are also being developed to cap the fees that regulated CMCs can charge their clients in financial claims such as PPI.

“The Government is taking action to make sure people aren’t having their time wasted or being taken advantage of by the greedy practices of some firms,” said Justice Minister Lord Faulks.

“We want to be certain that we are doing all we can to get consumers a fairer deal and rid the industry of rogue behaviour.”

In August the Claims Management Regulator issued its first fine – a £220,000 charge against a CMC making millions of cold calls. Since 2010 the regulator has removed the licences from over a thousand firms, including 300 last year.

The CEO of National Accident Helpline, Russell Atkinson, said that the company was pleased that he Government was once again looking at the issue.

“We have been working to stamp out this harmful practice in our own sector, most notably through setting up the Ethical Marketing Charter – to which signatories commit to never cold calling, texting or emailing. Almost 50 personal injury organisations have signed up to the Charter since its launch in July.

“We look forward to working with the Government on its review over the coming months and helping to make it as effective as possible – tackling rogue practices and strengthening regulation for the benefit of consumers.”

Mark Dugdale