Following an investigation into the activities of claims management companies (CMC’s), the Ministry of Justice (MOJ) has confirmed that it has revoked the licenses of 209 firms and warned another 140 that they must improve or face losing their licenses.
The MOJ is to pass laws making it more difficult for rogue CMC’s to manipulate customers who will be given greater protection against them. Businesses will be made to agree written contracts between themselves and their customers before any fee is paid.
The CMC’s take fees for managing and chasing personal injury, payment protection insurance (PPI) and other types of compensation claims even when there is no chance of a payout.
The MOJ’s Regulation Unit has shut down the firms for a variety of misdemeanors such as poor service, misleading marketing and hidden charges. A further three firms have had their licenses suspended.
The MOJ said that many of the firms that have had their licenses revoked had pursued claims without establishing if the claimants had any hope of receiving a payout and if there is no valid claim they did not refund the upfront fees paid by the claimants.
The MOJ said that with PPI claims, the firms provided no additional service that claimants cannot do for themselves just by making a complaint to their bank or making a claim to the Financial Ombudsman Service.
Kevin Rousell, Head of the Claims Management Regulation Unit, said: “In the past five years we have shut down more than 900 CMCs and are continuing to work with the Information Commissioner's Office to ensure firms who break the law on unsolicited calls and texts are dealt with.”
Justice Minister, Helen Grant said: “We will not tolerate claims management companies that rip off consumers and flout the rules – 352 claims management companies shut down, suspended or warned for bad practice by the Claims Management Regulation Unit shows we mean business.
“We have introduced a number of new measures in the past year which will mean consumers are much better protected and which offer a route of complaint and compensation while sending a clear message to the minority who break the rules their tactics will not be tolerated.”
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