Government to review claims management regulation

The Chancellor George Osborne has announced a major review of the regulation of claims management companies (CMCs) and a cap on the charges they can apply to customers.

Giving his Budget speech, Osborne said the government intend to scrutinise the regulation of CMCs which will be led by Carol Brady, chair of the Chartered Trading Standard Institute's Board. The review will report to HM Treasury and the Ministry of Justice (MoJ) in early 2016.

National Accident Helpline's chief executive, Russell Atkinson, welcomed the announcement, which he said was a way to ensure that the whole industry adheres to professional and ethical standards.

'National Accident Helpline has been working hard to drive up standards in the sector, such as through our Stop Nuisance Calls campaigns, and has been working proactively with government through the Insurance Fraud Taskforce.

'We look forward to working with the government to ensure the practices of CMCs are in the best interest of consumers and access to justice is not impaired,' he added.

The government announcement comes after the Sunday Times revealed how one of the nation's largest CMCs has allegedly been encouraging customers to fabricate or exaggerate injuries.

Staff at Complete Claim Solutions (CCS), which makes more than 7m cold calls a year, tempts motorists to make personal injury claims (PI) by promising awards of up to £5,000, allegations its managing director has denied.

CMCs were banned from offering inducements - such as upfront cash or free gifts like iPads - to PI claimants in the Legal Aid, Sentencing and Punishment of Offenders (LASPO) Act 2012.

To further emphasise the crack down on rogue CMCs, the government announced plans last year to heavily fine those companies that break rules set by the claims management regulation (CMR) unit at the MoJ.

This would include using information gathered by unlawful unsolicited calls and texts, wasting time and money by making spurious or unsubstantiated claims, and using misleading marketing. Large firms were warned they could be fined up to 20 per cent of their annual turnover.

John van der Luit-Drummond is deputy editor for Solicitors Journal
john.vanderluit@solicitorsjournal.co.uk | @JvdLD