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Chasing the claim cowboys

The plans for the regulation of claim management firms are better than nothing but leave a lot to be desired.

The Department for Constitutional Affairs has chosen Mark Boleat, former director general of the ABI to head the operation. This is perhaps the best part of the whole plan as Boleat is a smart and determined operator with strong links to the legal profession and the financial services industry.

Now that the compensation bill has become law, claim-chasers are already officially regulated on a transitional basis by the Lord Chancellors department although it is unclear what this means in practice.

The new regime proper will bite in November when a registration process will begin, with a deadline for February next year.

Boleat will usher in a system that will see claim companies, for long the bane of IFAs lives, required to have professional indemnity cover, capital adequacy and will undergo many of the checks familiar to intermediaries. There will be powers, including prosecution and fines, to discipline those who fall foul of the rules while Boleat will also seek out those who try to stay outside the regime, including IFAs which make referrals to the claims chasers.

The task that Boleat has been given is not an easy one, at least partly because of the odd set-up and the fragmented nature of the claim management sector.

Boleat, as a part-time chief, will have to oversee a process where a local trading standards office will bid to run the whole national system of regulation. He will have a budget of 1m to set the whole system up and this is not just to cover the financial services part of the market but also the personal injury compensation sector as well, which is a much bigger area in terms of claims.

Despite his abilities and expertise, the cards are surely stacked against him despite his tough talking.

Money Marketing finds it difficult to see how this can work although we hope that we are wrong.

It may be a case of right man but wrong job description. It may be a while before regulation really does drive out the cowboys from among claim-chasing companies.

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