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MoJ removes licences of 200 claims firms

The Ministry of Justice removed the licences of 200 claims firms during 2013 for flouting its rules, the latest data from the claims management regulator shows.

This takes the number of claims firms operating in the UK to 2,254 as at November 2013, down from a peak of 3,367 in 2011. The figure is made up of around 1,400 personal injury firms and about 1,100 financial claims firms.

In November the MoJ announced it is to be given the power to fine claims firms after an amendment to the Financial Services Bill.

It also launched a consultation on a set of toughened conduct rules for firms.

Justice Minister Shailesh Vara says: “With rigorous new measures being brought in across the board, we are taking strong action to rein in the rogue firms operating in this sector.
“Continued action to remove licenses from companies with poor practices alongside forthcoming regulation reforms, proves just how much work is going on to get tough on companies that defy the rules and bombard the public with unwelcome calls and misleading information.”


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There are 17 comments at the moment, we would love to hear your opinion too.

  1. What a pity the MoJ doesn’t cover eatate agents as well!

  2. Derek Bradley ceo Panacea Adviser 21st February 2014 at 9:38 am

    In 2012 Alan Lakey and myself highlighted concerns over the seemingly unchecked proliferation of claims management companies and noted that “the financial services industry is going through one of the most radical overhauls ever seen yet while all this is going on, the more ‘Wild West’ the legal system is becoming and one must question whether the MoJ is turning into a version of “Rock Ridge” where the town is out of control with no Sherriff”.

    So it was with a certain sense of ‘Schadenfreude’ that I note that since then the numbers have fallen further from 3,018 in March 2012 to 2,254. The Moj employing more staff to flush out the rest of the Whiplash fuelled ‘Tapeworms” is working.

    Well dome MoJ

    The FSCS reckoned at one stage that 75% of claims came from this source and the FOS almost 50%.
    Only last month I had a call from a claims management firm (0207 627 9502) asking me if I had been miss sold PPI insurance. This seems to have breached the Telephone Preference Service barrier too.

  3. With nearly 10% of firms having their licence removed it shows how corrupt this industry is. Hopefully some stiff fines will deter the worst offenders.
    Good for the MOJ to be taking some action.
    However I would like to see any claim submitted to FOS by a claims chaser accompanied by a fee from the claims chaser, even if this was only £100 it would deter the obvious false claims which would also relieve pressure on FOS.

  4. When I read this article I couldn’t help thinking. “Horse, Stable Door, Too Late”. The damage to our industry is beyond repair because of these leeches encouraging any Tom, Dick or Harry to submit complaints regardless of the truth. These companies have been getting away with blue murder for years and years and creaming off thousands of pounds at our expense. Whilst I’m happy something is being done at last I can’t help feeling this was long overdue and just the tip of the iceberg.

  5. Are there really so many tens of thousands of people unable, by themselves, to articulate (legitmate) complaints that they need to avail themselves of the services of as many as 1,100 CMC’s? Or is it more a matter of these firms actively canvassing everyone and anyone, on the basis that they can help them to get some money without it costing them anything to give it a go? Such a tactic is, of course, against MoJ rules but they get round that by outsourcing the task to an unregulated third party “marketing company”, in truth just some scumbag bunch of dirt trawlers operating out of a scabby office above a second hand tv shop, sending out thousands of unsolicited texts, e-mails and pre-recorded messages (I’ve received a good few).

    It would be interesting to see a catalogue of all the various reasons why these 200 parasitical cowboy outfits were struck off.

  6. @Nick Pilkington

    The pressure on FOS is caused predominantly by very poor complaint handling amongst the major lenders who have realised that it is less costly to blanket defend sales because sufficient consumers will give up at that stage rather than go to FOS. This produces a net cost saving even allowing for the FOS fee.

    I agree with you that a fee should be charged but think it should be much higher. The losing party pays a FOS fee of £2,500 on case completion – £500 of this is paid to the other party towards the cost of preparing / defending the case. The additional fee retained by FOS enables all adjudicators to be trained to at least diploma level and to provide for personal hearings on request for complex cases. There could be a fee waiver for consumers raising their own complaint.

    @ James Watkin

    Were it not for the malpractice in the Financial Services Industry the financial claims industry couldn’t have developed. The key problem is that a lot of the public wrongly take the approach that small firms are to blame when both statistics and anecdotal evidence demonstrates that the high street banks and credit card companies were the principal culprits. As with every industry there is good and bad – the problem with the claims industry is that you will never hear from the good firms because they will assess the validity of a claim before deciding whether to submit and will not be cold-calling you to make a claim.

  7. Only 1,150 to go

  8. Abacus Chrome comment 1. Alerts on

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  10. Abacus test comment 3 in Chrome. Alerts on.

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  15. CMC Manager | 21 February 2014 10:16 am

    I agree with you up to a point; but you have to accept that this so called claims industry was allowed to develop at a great pace when it could be plainly seen fraudulent claims were being pursued in the name of chancing their arm for money. The IFA community tried to bring this to the attention of anyone who would listen but nothing was done. (until now perhaps?) I still have difficulty believing that every bank customer was miss-sold PPI when you hear stories of customers making compensation claims after they have claimed on the actual policy.

  16. abacus test comment 21/02 – please ignore

  17. I like CMC Manager’s suggestion.

    A fraudulent complaint about a non-existent PPI policy comes in. The adviser can then sit on it and do nothing. The case goes to FOS, the CMC pays £2,500, the adviser says no policy existed and FOS passes £500 to the adviser.

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