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Govt bill aiming to rein in cowboy claim firms

The Government’s Compen-sation Bill has set out its plans to regulate claim manage- ment companies, with a maximum of two years’ imprisonment for those working out- side regulation.

Constitutional affairs secretary Lord Falconer says the bill will stop unscrupulous companies exploiting the public, making it an offence for firms to provide claim serv- ices if they are not author- ised under the new regime, whether that is through a new body or through the FSA or the Law Society.

Under the bill, ambulance- chasers, including those handling ,mortgage endowment complaints, will have to comply with rules and a code of practice laid down by the regulator and ensure that the public are not misled by inappropriate and aggressive advertising. Falconer says the public need to be given pro-per advice about the merits of their claim and not encouraged to “have a go” and make frivolous claims.

Claim management companies will have to provide clear advice about the validity of the claim amd options for funding the costs and offer a complaints mechanism if things go wrong.

There is currently a voluntary code of self-regulation run by the Claims Standards Council but it is widely perceived to have failed as it lacks the necessary powers to hold people to account.

Falconer says: “It is time to put the brakes on the cow- boy claim companies which take advantage of the public. Responsible firms are suffering from the reputation of the mavericks and give good claim management comp-anies a bad name.”

Law Society president Kevin Martin says: “Rogue claim farmers have been allowed to exploit unsuspecting consumers for too long and so this bill is welcome.”

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