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Labour doubts MoJ is fit to regulate claim-chasers

Labour peer Lord Kennedy says he will ask “fundamental questions” about the regulation of claim management companies when he meets with justice minister Lord McNally and consumer groups on April 24.

Lord McNally agreed to the meeting in response to a question from Kennedy in the House of Lords last month.

McNally told the House of Lords he accepted the Government must do more to crack down on “dodgy practices” used by CMCs and suggested there may be “a better home” for the regulation of CMCs than the Ministry of Justice.

Financial Ombudsman Service board member and fellow Labour peer Baroness Maeve Sherlock will also attend.

Speaking to Money Marketing, Kennedy says: “I will be asking fundamental questions about whether it is right the MoJ regulates these firms. The Department for Business Innovation and Skills usually covers this kind of thing and it may be they can do a better job.

“CMCs can be very aggressive, some are ripping people off and hoovering up complaints like they do can lead to spurious claims and that is a waste of everyone’s time.”

Financial Services Compensation Scheme figures for 2011, published in January, show that 75 per cent of payment protection insurance claims were brought by CMCs.

Rowley Turton director Scott Gallacher says: “The Financial Ombudsman Service makes the complaint process simple and, apart from filling in a few forms, I cannot see what value CMCs add.”

Which? executive director Richard Lloyd says: “CMCs must clean up their act.”

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. And about time too.

    Does regulation exist for these low-life conmen?

    Yesterday alone I received three etxts – two about the accident I didn’t have which will give me £3,240 and one about my non-existent PPI plan where compo of £2,631.14 awaits me.

    Compare the stringent rules that the FSA operates with the lax shoegazing perpetuated at the MOJ.

    This is fraud. There is no other way to describe these practices.

  2. Until it was announced that the MoJ had been handed responsibility for regulating Claims Instigation Companies (Management hardly seems an appropriate term), I hadn’t even been aware that it was a regulatory body at all. What else does the MoJ regulate? Anything?

    Why didn’t the FSA take on the job? After all, the FSA seems to be keen to regulate pretty well everything else under the sun (with the notable exception of unsecured borrowing, which is surely one of society’s most significant problems). Maybe the FSA decided it already has too much on its plate steamrollering through its RDR and making excuses for all the motorway pile-ups that it should have averted but which it’s manifestly failed to do.

    Had the FSA declared an interest in regulating CIC’s, many people might well have asked on what basis, given that it’s clearly incapable of discharging its present regulatory responsibilities.

    Whoever decided that the MoJ should be given the job instead of the FSA?

    Like Alan and many others, I too receive unsolicited phone calls (daily) both at home and on my mobile, texts, e-mails and letters from these low-life vultures and now we hear that the FOS is overloaded with referred complaints.

    Surely, it would have been better if the FSA had simply directed the banks to write to all their MPPI customers outlining the suitability criteria for the cover they’ve been sold and inviting them to respond only if they feel that they might not, after all, actually meet these criteria.

    Instead, what we’re seeing now is a massive mess as a result of regulatory mishandling of a situation that should never, in the first place, have been allowed to develop into the mis-selling epidemic that it clearly has.

    Another triumph for the FSA!

  3. Alan calls them “low-life conmen” and in far too many cases he is right on the button.

    However, there are “low-life conmen” who are supposedly regulated by the FSA, take the banks for example, or open your eyes to see what some IFAs are up to, a few stockbrokers are just as bad.

    I can’t see how regulation can prevent the excesses caused by greed, or stupidity.

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