Crackdown on dishonest claims management firms

The Government’s efforts to tackle the UK’s apparent compensation culture have received a boost with the announcement that a record number of rogue claims-management companies have been shut down by the Ministry of Justice (MoJ) in the last year.

A total of 349 firms was closed down last year in comparison to 35 the year before – a ten-fold increase – and 256 of these companies operated in the personal-injury market.

The MoJ’s Claims Management Regulation Unit aims to prevent firms from exploiting vulnerable consumers by over-selling expectations of compensation payouts. The firms that had their licences taken away in 2010/11 were either found to be in breach of rules, or failed to meet the regulator’s requirements for authorisation.

In the worst cases, the reasons for action included evidence of fraud, misleading marketing and aggressive sales techniques. During the year, the regulation unit also targeted unsolicited e-marketing, in particular, SMS text messages, which some claims companies use to market their services.

Kevin Rousell, who heads up the Claims Management Regulation Unit, said: “We have made it very clear to businesses that we are not going to accept any malpractice, or attempts to take advantage of vulnerable people. There will be no let-up in the coming year. Companies should remain in no doubt that if they breach the rules they will be closed down.”

The regulatory action comes at a time when the Government is proposing to reform ‘no win, no fee’ deals and overhaul the civil-justice system. The sweeping changes aim to tackle concerns that a growing compensation culture is paralysing schools, businesses and community groups because they fear being sued.
http://www.shponline.co.uk/news-content/full/reforms-proposed-for-out-of-kilter-civil-justice-system

The reforms include restructuring ‘no win, no fee’ deals to discourage needless and excessive litigation, as well as reviewing the ways advertising is used by claims management companies to attract business.

A spokesperson for the Association of Personal Injury Lawyers (APIL) said it supported the crackdown but warned that it must not overstep into removing access to justice.

She said: “If the MoJ’s action protects injured people then APIL fully supports it. There is no real need for injured people to use the services of CMCs at all, when they can cut out the ‘middle man’ and go direct to an accredited lawyer. Our only concern with any regulatory action in the personal-injury sector is that maintaining access to justice for genuinely injured people remains paramount and is never compromised.”

Crackdown on dishonest claims management firms

The Government’s efforts to tackle the UK’s apparent compensation culture have received a boost with the announcement that a record number of rogue claims-management companies have been shut down by the Ministry of Justice (MoJ) in the last year.

A total of 349 firms was closed down last year in comparison to 35 the year before – a ten-fold increase – and 256 of these companies operated in the personal-injury market.

The MoJ’s Claims Management Regulation Unit aims to prevent firms from exploiting vulnerable consumers by over-selling expectations of compensation payouts. The firms that had their licences taken away in 2010/11 were either found to be in breach of rules, or failed to meet the regulator’s requirements for authorisation.

In the worst cases, the reasons for action included evidence of fraud, misleading marketing and aggressive sales techniques. During the year, the regulation unit also targeted unsolicited e-marketing, in particular, SMS text messages, which some claims companies use to market their services.

Kevin Rousell, who heads up the Claims Management Regulation Unit, said: “We have made it very clear to businesses that we are not going to accept any malpractice, or attempts to take advantage of vulnerable people. There will be no let-up in the coming year. Companies should remain in no doubt that if they breach the rules they will be closed down.”

The regulatory action comes at a time when the Government is proposing to reform ‘no win, no fee’ deals and overhaul the civil-justice system. The sweeping changes aim to tackle concerns that a growing compensation culture is paralysing schools, businesses and community groups because they fear being sued.
http://www.shponline.co.uk/news-content/full/reforms-proposed-for-out-of-kilter-civil-justice-system

The reforms include restructuring ‘no win, no fee’ deals to discourage needless and excessive litigation, as well as reviewing the ways advertising is used by claims management companies to attract business.

A spokesperson for the Association of Personal Injury Lawyers (APIL) said it supported the crackdown but warned that it must not overstep into removing access to justice.

She said: “If the MoJ’s action protects injured people then APIL fully supports it. There is no real need for injured people to use the services of CMCs at all, when they can cut out the ‘middle man’ and go direct to an accredited lawyer. Our only concern with any regulatory action in the personal-injury sector is that maintaining access to justice for genuinely injured people remains paramount and is never compromised.”

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