MoJ claims management review must separate financial product CMCs from all others, says First4Lawyers

The Ministry of Justice needs to make a clear distinction between claims management companies that deal with financial mis-selling and those that operate in other areas as it reviews regulation of the sector, according to First4Lawyers.

In its response to the review’s call for evidence, which closes today, First4Lawyers is concerned that the MoJ will impose unnecessary restrictions on the whole CMC market due to the behaviour of some CMCs who deal exclusively in financial claims such as PPI.

First4Lawyers has also recommended banning the widespread practice of businesses selling on data when the purpose is to seek potential claims and has called for the insurance industry to take a zero-tolerance approach to challenging all dubious claims in court, rather than seeking to get rid of them as quickly and cheaply as possible.

Qamar Anwar, managing director of First4Lawyers, said “We believe that there are effectively two CMC markets – financial products and everything else. We are concerned that there could be unintended consequences as a result of extra regulation aimed primarily at the activities of financial CMCs.

“We are also concerned that there is a lot of generalisation and perception around the CMC market, but not so much data. We hope that this review will identify robust evidence sources and then share them with stakeholders for comment before reaching any conclusions.”

First4Lawyer’s response also points out that the evidence published by the Claims Management Regulator and the Legal Ombudsman indicates that financial CMCs are the overwhelming cause of consumer complaints and dissatisfaction.

A report this month from the Legal Ombudsman said that 94% of consumer complaints since it took on the jurisdiction six months ago relate to financial CMCs.

Mark Dugdale