Government Continues Clampdown On Dodgy Cmcs
16th December 2013
While we will do all we can to help you in your personal injury claim, if you ask a claims management company (CMC) to help you in a personal injury claim, the CMC may actually scupper your chance of success and see you receiving less compensation than you deserve should you actually succeed in your case.
CMCs say that they can help people file compensation claims for accidental injuries or for missold financial products such as PPI, but many take up-front fees and then deliver a frankly appalling service. Claiming PPI compensation is as simple as filling out a form letter available on the Financial Ombudsman Service’s website and sending this to the responsible bank, but the Citizen’s Advice Bureau has received reports from people who have been charged £1,200 after receiving just £3,500 in PPI compensation, or a woman who received a compensation claim of £1,800 and was told to pay the CMC nearly £1,000 of this.
Because of the harm unscrupulous CMCs can cause to personal injury claimants, we welcome any legislation that should hinder them, and welcome Justice Minister Shailesh Vara’s announcement on December 10th that the Legal Ombudsman will now handle all complaints about CMCs, as the Ombudsman has the power to compel customers to provide redress to consumers, such as compensation. This will also allow the Ministry of Justice’s Claims Management Regulation (CMR) unit to spend more time and money tackling badly-behaving CMCs.
The new law will allow the government to fine CMCs that provide low-quality services, or that use information received through cold-calling and unsolicited text messaging, and will require CMCs to audit their methods of data-gathering and to ensure all the claims they submit have a reasonable chance of success and are backed up with full evidence.
The government has already taken steps to deal with dodgy CMCs, including:
– Preventing CMCs from charging clients before contracts have been signed
– Boosting the powers of the CMR unit to enable it to fine CMCs that break the rules
– Preventing firms from offering people with profitable claims gifts or cash
– Naming any companies that are under investigation or have enforcement action taken against them
– Preventing middlemen from receiving referral fees and changing the rules about no win no fee claims – a move that has also affected personal injury solicitors
When people are claiming compensation with the help of a company, they should expect the company to be honest and up-front about their charges, should receive a written and signed contract, and should have cancellation rights.
Although the government’s move is welcome, we would prefer rules put in place that would prevent CMCs from behaving badly to begin with. For example, the government should outright ban cold-calling by CMCs – we will never cold-call you out of the blue, and would ask you to report any cold callers that claim to be from us to the police, particularly if they involve the transfer of money, and to report the call to us by dialling 08000 430 430.
The new laws will come into force through the Financial Services (Banking Reform) Bill, which is expected to receive Royal Assent in early 2014.