MoJ to issue early 'name and shame' notices against claims farmers

The Ministry of Justice is to publish early 'name and shame' notices in respect of claims management companies under investigation under a new policy unveiled today.

About 2,600 claims management companies are currently authorised by the Claims Management Regulator, an MoJ agency, operating lead generation businesses in the fields of personal injury, PPI mis-selling, employment claims, or housing disrepair claims.

The new policy follows the setting up of additional functionality in the regulator's online register which will include details of the companies subject to investigation.

"By creating an online list that names CMCs that are being investigated it will ensure consumers know exactly what action is being taken and the reason for it. It will also give consumers peace of mind that their complaints are being acted upon," said head of claims management regulation,"  said head Kevin Rousell.

Roussell said the move should stop consumers unknowingly signing up with a claims management companies under investigation and was part of a wider drive to root out malpractice in the sector.

Consumers checking a claims management company's details will be able to see the rules the regulator believe a CMC has breached - or was found to have breached - as well as the outcome, which can range from warnings through to suspensions and cancellations of its licence.

Of the 2,600 CMCs licensed by the MoJ, around 1,700 operate in the personal injury sector and 1,150 in the financial claims sector (some operate in more than one sector).

Last year more than 10,000 complaints were made to the regulator, relating mostly to misleading marketing, high-pressure selling, poor complaints systems and unclear fees.

The Regulator has also banned inducement advertising, which will ban CMCs from offering cash incentive to sign up to using their services.

New rules coming into force this summer will also make verbal contract arrangements between consumers and CMCs unenforceable and require a written contract before any fee can be taken.

Since regulation began in 2007, the licences of over 900 CMCs have been removed across sectors and others have exited the industry after the commencement of enforcement action.