Justice Minister Shailesh Vara MP has announced that complaints from consumers relating to the practices of claims management companies will be transferred from the Claim Management Regulator [CMR] to the Legal Ombudsman. The change came when a late amendment to the Financial Services (Banking Reform) Bill was approved by the government earlier this week. The Bill is currently progressing through Parliament and had its Third Reading in the House of Lords on Monday 9 December 2013. It is expected to receive Royal Assent by early next year and it should enable the Legal Ombudsman to start handling consumer complaints about claims management companies later in 2014. Significantly, the change will enable the Legal Ombudsman to force companies to pay compensation or provide other forms of redress where appropriate.
This has been a long debate!
Frankly, the debate about how and who should manage consumer complaints about claims management companies has been going on for far too long and the PFCA welcomes today’s announcement and the clarity it brings. Professional claims management companies, who put customers first, have nothing to fear from these changes.
In announcing the change Mr Vara said, “Consumers should be in no doubt that the bad companies out there are being dealt with. We have already ended the licenses of more than 1,000 companies and tough new powers are now being brought in across the board. This latest change will make sure people who get a bad service can get redress.”
The PFCA also welcomes the comments of Legal Ombudsman Adam Sampson who said, “It is also good news for claims management since it will boost confidence in the services provided by the sector.” The PFCA is already working with regulators and consumer groups to raise standards in the claims management sector and the changes announced today reinforce the work that has already been completed. Members of the PFCA follow a strict code of practice and their members compliance with it is independently audited. So, not surprisingly, the PFCA particularly welcomes the Justice Minister’s comment in respect of bad companies and the Legal Ombudsman’s comment in respect of boosting confidence in the sector.
Move back to addressing the important issues of redress
Once there is a robust, fit for purpose redress process in place the debate will, hopefully, shift from the impact of a few ‘bad companies’ to the important issue of getting redress from financial institutions for customers who have been mis-sold financial products. These often suffer further detriment when appropriate redress is reduced by the use of loopholes in the redress process, or when deliberate procrastinating tactics delay the payment of appropriate redress