MoJ given teeth to clampdown on rogue claims firms

clock

The Ministry of Justice (MoJ) will be given the power to fine claims firms which use information gathered by unsolicited calls and texts or who provide poor quality services.

Claims management firms have flourished following the payment protection insurance (PPI) mis-selling scandal. Calls are often automated and are made to people who never bought the product, but who are told they can make a claim.

The MoJ fines against claims firms will be brought in as part of changes being made through the Financial Services Banking Reform Bill and are expected to take effect next year when details on the maximum fine levels will be published.

In addition, the MoJ said its Claims Management Regulation (CMR) unit will be expanded with more enforcement staff. This will be funded by "an uplift in fees paid by regulated claims firms", according to the MoJ.

The unit will be further strengthened with the appointment of independent regulatory experts in non-executive roles, according to CMR head Kevin Rousell.

New rules will be published by the CMR unit later this week and will include giving claims companies a duty to make sure the claims they are submitting have a realistic chance of success, as well as ensuring full evidence is provided to back up any allegations.

Firms will also have to carry out thorough audits of how data they use has been gathered, so they can no longer turn a blind eye to whether leads have been found by illegal marketing texts and calls.

Justice Minister Shailesh Vara said: "We will not tolerate companies which waste hardworking people's time and money through their own laziness, incompetence or frankly dubious practices.

"We are already making sure rogue companies are shut down - and now we are ensuring those who are wasting everyone's time will pay for it."

Financial Secretary to the Treasury Sajid Javid said: "These new rules will put PPI claims pests in their place.

"Cold call companies that bother the public will now have one less reason to do so."

Government action has led to the number of claims firms operating dropping by more than 1,000 since a peak of 3,400 in 2011 to 2,300 now.

More on Regulation

CII to reduce headcount by eight to 'deliver better outcomes'

CII to reduce headcount by eight to 'deliver better outcomes'

Forming plans to streamline processes and services

Isabel Baxter
clock 26 March 2024 • 1 min read
BIBA names Julie Comer as head of compliance

BIBA names Julie Comer as head of compliance

Helping members with compliance queries and concerns

Jaskeet Briah
clock 20 March 2024 • 1 min read
FCA unveils measures for more transparent enforcement cases

FCA unveils measures for more transparent enforcement cases

Consultation process initiated

Sahar Nazir
clock 27 February 2024 • 2 min read

Highlights

COVER Survey: Advisers damning of protection insurer service levels

COVER Survey: Advisers damning of protection insurer service levels

"It takes longer than ever to get underwriting terms"

John Brazier
clock 12 October 2023 • 5 min read
Online reviews trump price for young people selecting life and health cover

Online reviews trump price for young people selecting life and health cover

According to latest ReMark report

John Brazier
clock 11 October 2023 • 2 min read
ABI members with staff neurodiversity policy nearly doubles

ABI members with staff neurodiversity policy nearly doubles

Women within executive teams have grown to 32%

Jaskeet Briah
clock 10 October 2023 • 3 min read