Claims management companies (CMC) that provide a poor service could now be forced to pay compensation or provide another form of redress, the Ministry of Justice (MoJ) announced today.
The MoJ crackdown will see consumer complaints about CMCs taken to the Legal Ombudsman which will have the legal power to ensure consumer compensation where necessary. Currently complaints are directed to the Regulator.
The change will also enable the Claims Management Regulation Unit, which will remain in the Ministry of Justice, to refocus its resources on working with the claims management industry.
The aim, the MoJ stated, was to improve standards and take wider action against CMCs that consistently breached the rules.
Kevin Rousell, head of claims management regulation, said: "This reform is a win for consumers and provides yet another tool to help stamp out malpractice in the industry.
"The Claims Management Regulation Unit will continue to target those CMCs who do not comply and we will work in partnership with the Legal Ombudsman to root out those CMCs that take advantage of consumers.'
Adam Sampson, chief legal ombudsman, said the priority now was being ready to start accepting complaints once the arrangements were in place.
