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CMCs and MPs see Claims Management Regulator’s teeth!

For as long as I can remember, the Claims Management Regulator [CMR] has been the subject of claims in the media that it does not have the capacity, expertise or resource to be able to properly regulate CMCs. The claims are usually made by those businesses that are complained about who are sometimes supported by MPs. I recall Jonathan Evans (chair of the All Party Parliamentary Group on financial services and insurance) suggesting that, “It is perfectly clear the MoJ does not have the capacity, expertise or resource to be able to properly regulate CMCs” and that their work should be passed to the Financial Conduct Authority”.

Rogue CMCs continue to be removed

A recent announcement by the Ministry of Justice [MoJ] shows that in the past year more than 200 licenses have been removed from rogue claims firms which have flouted the rules. A press release issued by Shailesh Vara MP shows that the Government continues to crack down on CMC’s which abuse the system. The press release states, “Action against CMCs which have failed to comply with industry standards has been stepped up over the last 12 months, as part of wider action to clamp down on bad practice”.

PPI claims firms in the spotlight

The increased regulatory focus has seen the total number of CMCs drop by more than 1,000 since a peak of 3,367 in 2011 to 2,254 in November 2013. And it is highly likely that this trend will continue as the Government introduces a new set of toughened rules to crackdown on abuses, increases fees for CMCs (which means the claims sector – and not the taxpayer – continue to provide the sufficient resources needed to meet the cost of regulation) and gives the CMR new powers to fine firms for rule breaches, as well as employing more enforcement staff to tackle irresponsible practice. There is no doubt that those firms who adopt rogue practices which include those who undertake SMS marketing, those who cold call in an illegal way, and those who charge an upfront fee for PPI claims are coming under a more rigorous regulatory spotlight.

It is clear the critics are wrong and the CMR does have teeth.

As the CMR sorts out the remaining rogues in the CMC sector the regulatory focus now needs to shift to expose product providers who continue to adopt cynical practices that compound the consumer detriment by delaying genuine claims. As these tactics become more devious consumers are more likely to need the help of a third party, such as a CMC, to manage their claim so consumers should be confident in selecting a professional CMC to assist them in the knowledge that the CMR is ensuring that CMC rogues are removed from the industry.

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Membership Benefits & Services

The Benefits and Services of the Professional Financial Claims Association are intended to extend beyond its own membership. The Financial Claims Management sector needs a credible ‘voice’ at a time of change and increased scrutiny within the sector.