The Ministry of Justice has published its 2014/15 Claims Management Regulation Annual Report. This report covers the main developments, achievements and progress made in claims management regulation over the last 12 months and sets out the priorities for the future.
Points of interest in the report include:
• The power to impose financial penalties on CMCs for rule breaches has come into force.
• The Legal Ombudsman has begun accepting complaints about CMCs and CMCs are now required to make this avenue clear to consumers.
• The programme of regulatory reform to improve the effectiveness of CMC regulation within existing resources has continued. Members may wish to note that the Chancellor announced a fundamental review of the regulation of claims management companies (CMCs), which will report to HM Treasury and the Ministry of Justice in early 2016. The Government says it will bring forward proposals – on which it will consult – for a cap on CMC charges to their customers. These are very welcome developments, following FLA lobbying to tighten up the regulation of CMCs.
• Conduct rules have been tightened to help tackle abuses in financial claims so that these are properly substantiated and that leads received from telemarketing sources are obtained legally.
• PPI claims remain the most prevalent, though claims relating to packaged bank accounts and mis-sold investments are beginning to emerge.
• A continuing focus on the regulation of personal injury claims, in light of the ban on referral fees, to monitor how firms have adapted to the ban, and a focus on fraudulent personal injury claims, working closely with other enforcers to disrupt the criminal activities of individuals and groups within claims management.
• Steps taken to tackle nuisance calls and unsolicited marketing, working closely with other regulators.
• Enforcement action continued with 93 investigations, the cancellation of 105 authorisations, 296 warnings, compliance audits of 454 CMCs and a further 100 visits.
Priorities for claims management regulation in 2015/16 include:
• Nuisance calls and unsolicited marketing.
• Unsubstantiated claims relating to financial products and services.
• Personal injury claims.
• Unauthorised activity.
We will continue to work closely with the MoJ on improving the regulation of CMCs.