Claims firms which use information gathered by unsolicited calls and texts or who provide poor quality services will face large fines under law changes announced by the UK Government last week.
Tough new rules are being introduced as the part of a package of ongoing work by government to crack down on the rogue firms responsible for targeting the public with misleading advertising and flooding banks with unsubstantiated claims for compensation – at a cost to other customers.
To ensure that the claims management industry delivers the best possible results for consumers, the Claims Management Regulation (CMR) Unit at the Ministry of Justice will also be expanded with more enforcement staff, funded by an uplift in fees paid by regulated claims firms, and a new set of toughened conduct rules will be unveiled this week to bear down on abuses by companies.
Government action has already seen the number of claims firms operating drop by more than 1,000 since a peak of 3,400 in 2011 to 2,300 now.
The fines will be used to make sure that those which remain in the industry follow the rules – and that they pay for it when they do not.
The fines will be brought in as part of law changes being made through the Financial Services (Banking Reform) Bill which is currently progressing through Parliament.
They are expected to take effect next year, when further details on the maximum fine levels will be published.
More than 1,100 claims companies specialise in helping people make claims for compensation for mis-sold financial products (like Payment Protection Insurance (PPI)). Banks have complained that some firms are responsible for deluging them with inaccurate and incomplete claims which have caused unnecessary costs and major delays in resolving genuine claims.
The new rules being published by the CMR unit this week 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.
For more information go to: https://www.gov.uk/government/news/rogue-ppi-claim-companies-targeted-by-fines-and-toughened-regulations