MINISTRY OF JUSTICE
News Release (042-08) issued by The Government News Network on 22
May 2008
Cowboy claims
companies have been forced to clean up their act says a report out today.
The Ministry of Justice's first annual report says better
regulation has significantly reduced cold calling in person, which
includes the practice of 'clipboarding' - knocking on
doors and aggressively approaching people in shopping centres.
Unauthorised advertising and marketing in hospitals have also been
almost entirely removed.
Bridget Prentice said:
"The regulation has put in place vital safeguards for
consumers when using the services of claims management companies
and is raising standards across the industry.
"The new rules that claim managers must now follow have
cleaned up the industry. Consumers can have more confidence that
they will be dealt with fairly when seeking to make a claim.
"I am delighted to present the first annual review for the
Ministry of Justice Claims Management Regulation Unit"
Those authorised to provide the regulated services must now
follow strict rules of conduct. This will ensure that consumers
are given clear information about the options available for
pursuing their claim and the associated costs. If an authorised
person fails to comply with the rules the regulator can take
appropriate disciplinary action.
Other successes include a strategy developed to deal with
outright fraud like contrived accidents and a significant
reduction of malpractice by companies handling claims made to the
Criminal Injuries Compensation Authority, with some businesses
voluntarily leaving the market.
The speed in which regulation was introduced - nine months from
Royal Assent to the Act being fully in force - and the success in
raising awareness among businesses who would need to be authorised
resulted in three times more businesses coming forward than had
been anticipated. The flexibility in the legislation and the
regulatory framework means we can respond to such demands quickly.
Notes for Editors
1. The Compensation Act 2006 received Royal Assent on 25 July
2006. Part 2 of the Act establishes a statutory framework for the
regulation of claims management services. It is now prohibited to
provide the regulated services unless authorised or exempt. The
Regulator has powers under the Act to take action against persons
suspected of providing regulated services without authorisation,
and against authorised persons suspected of breaching the rules or
unprofessional conduct.
2. The Annual Report will be at: http://www.justice.gov.uk/publications/claims-management-annual-review-08.htm
and the Full Impact Report will be at: http://www.justice.gov.uk/publications/claims-management-impact-regulation.htm.
3. Once authorised, businesses will have to comply with strict
rules of conduct including:
* a prohibition on cold calling in person;
* a prohibition on
high pressure selling;
* transparent contracts;
*
disclosure of referral fees, and
* provide a comprehensive
complaints procedure.
4. The regulation will initially apply to claims in respect of -
- Personal injury
- Criminal injuries compensation
-
Employment
- Housing disrepair
- Financial products and
services
- Industrial injury disablement benefits
5. The designated website provides guidance and comprehensive
information on the authorisation process and other aspects of the regulation.
6. Following the formal tender exercise in summer 2006,
Staffordshire County Council's Trading Standards Unit was
selected to run the Monitoring and Compliance Unit for the
regulation of claims management services on a three-year contract.
The unit is based at 57-60 High Street, Burton-on-Trent, which has
been processing applications for authorisation since November 2006.
ENDS
http://www.justice.gov.uk