Claims management firms will need to prove themselves ‘fit and proper’ in future

The Chancellor revealed a host of new measures in last month’s budget, but one that didn’t quite hit the headlines was his crackdown on what the Treasury’ deem to be‘rogue’ claims management companies.

After undertaking a review of existing policy and legislative measures in this often controversial area, George Osborne has moved to target the firms that prey on would-be customers via a succession of nuisance calls, together with those who simply offer a substandard service.

With this in mind, George Osborne will set about creating a ‘fit and proper test’ which will ultimately establish whether or not a claims management firm is deemed professional, trustworthy and accountable for their actions and moreover, if they have the best interests of their customers at the top of their agenda.

As an integral part and parcel of this vision, Whitehall movers and shakers explained that, at the nucleus of these new proposals, phone calls between claims management companies and clients would be stringently monitored; a stipulation which should be unopposed if the firm intends to continue practising.

Describing how its plan is to provide a more hard-line regulatory stance and accepted means of protocol and governance in respect of the claims management sector as a whole, the Treasury has sought to collaborate with another Whitehall department – namely the Ministry of Justice – to oversee its roll out, whilst ensuring that it doesn’t have a disproportionate impact on society as a consequence.

At the same recent juncture, Osborne has mooted the long-term possibility of delegating ownership-taking, by decreeing that henceforth the Financial Conduct Authority could become responsible for the regulation of claims management firms, adding that; “The new regime will be tougher and will ensure CMC managers can be held personally accountable for the actions of their businesses.”

The post-Budget-released review will highlight the fact that there remains a ‘widely held perception of widespread misconduct’ in relation to claims management companies, which is something which needs to be addressed. Far from wishing to curtail the operations of CMC’s (or indeed, as detractors have alleged, regulate them out of existence), the government for its part simply wishes to make them more accountable at the end of the day; underlining that it appreciates these justice-pursuing lifelines aimed at helping the general public effectively right wrongs.

However the review did identify that some CMC’s represent questionable value for money, can seemingly misrepresent the service it provides and do still practice nuisance calls and texts regarding speculative or fraudulent claims.

It’s in light of this the review suggests that all those employed in the capacity of claims management firms pass a fit and proper persons test and moreover be ‘held personally accountable for rule breaches for which they are responsible’.

With direct reference to the recording of calls, the review recommends that such recordings are retained for a minimum period of one year post conclusion of client’s contract, along with the outline proposals in general have been welcomed by the Association of British Insurers.

Indeed, its Director General Huw Evans vocally supported Osborne’s initiative for closer scrutiny of the CMC sector, adding that in his opinion the public had been ‘at the mercy’ of the more unscrupulous firms for too long. Evans went on to say; “It should go a long way in driving the cowboy operators out of town and helping to ensure honest customers don’t end up footing the bill for their dodgy practices.”


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