Apfa has written to the justice secretary Chris Grayling to urge the Ministry of Justice to suspend or ban claims management companies that submit bogus claims.
In his letter to Grayling, Apfa chairman Lord Deben says there is an increasing number of claims being submitted by CMCs where no policy ever existed or where there is no evidence of misselling. He notes the Financial Ombudsman Service dismissed more than 5,000 payment protection insurance complaints last year because no policy was sold.
Apfa says the MoJ needs to act quicker when claims from CMCs are found to be fraudulent by suspending or removing a CMC’s authorisation.
The trade body has called on the MoJ to introduce higher standards of approval for claims, equal to the standards set for FSA-regulated businesses. Apfa says this should include scrutiny of business plans and checks on the individuals running claims firms.
It also wants to see a doubling of the number of staff devoted to supervising claims firms, paid for by increasing CMC’s regulatory fees.
Apfa policy director Chris Hannant says unsolicited marketing calls and texts also need to be tackled as they are often the starting point for generating fraudulent claims. The Information Commissioner has had 60,000 reports about unwanted calls and texts since March 2012.
Hanant says: “Fraud should be treated as the crime it is. The MoJ needs to take tougher action. Advisers should report any bogus or fraudulent claims straight to the MoJ.”
Apfa has set up a reporting form on its website for advisers to notify the MoJ of fraudulent claims. Advisers can also report fraudulent complaints directly to the MoJ’s Claims Regulation Unit via email@example.com.