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MoJ shut down over 700 claims firms last year

The Ministry of Justice has closed down around one in five claims management companies over the last year and almost doubled the number of MoJ staff responsible for regulating claims firms.

A freedom of information request submitted by the Law Society Gazette found the MoJ’s Claims Management Regulation department cancelled the authorisation of 734 claims firms in the year to the end of March.

The closures brought down the total number of authorised claims firms to 3,018.

The MoJ has set up a dedicated team to deal with poor practices by rogue claims firms who solicit claims for missold payment protection insurance.

The number of MoJ staff that have been allocated to regulating claims firms has risen from 32 in 2007, when the MoJ took over claims management regulation, to 57 currently.

The MoJ launched an investigation last month into claims management companies after a wave of invalid compensation claims on behalf of customers allegedly missold PPI.

The Government has admitted it needs to do more to address the “dodgy practices” used by some claims firms with justice minister Lord McNally telling the House of Lords earlier this month there may be a “better home” for the regulation of CMCs than the MoJ. In January, the Financial Services Compensation Scheme revealed over three quarters of the PPI claims it received between 2008 and 2011 came through claims management companies.

Claims management companies accounted for nearly half of all cases received by the Financial Ombudsman Service during 2011.


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There are 9 comments at the moment, we would love to hear your opinion too.

  1. Good, now how about closing down the rest?

  2. Make these companies pay a fee for every case submitted. This will stop them making invalid claims.

  3. Which just shows how lax the system for getting authorised is.

    However, they do seem to be alert to complaints about non-existent PPI (at last). I recently reported one to and got a positive response – although whether it comes to any substantial result remains to be seen.

  4. If the word ‘dodgy’ is being used in place of ‘fraudulent’, why are we only hearing about shut-downs of these firms; the shut down should be accompanied by prosecution under the Fraud Act wherever possible.
    M o J; please man-up and do a proper job.

  5. Whilst some of these cnlaims are justified, many are not and are causing unnecessary work and increased cost on the financial services industry. This is very unfair and a fee should be charged to the claims firms that submitt these case that are not upheld. Also, individual brokers, networks and insurers should be allowede to charge these claims firms a fee, to cover the cost of wasted work and time incurred, where the claim is not substantiated or upheld by them or the FOS.

  6. Justin Credible 17th April 2012 at 9:48 am

    As mentioned on a similar post yesterday, we have a case whereby the claimant has successfully managed to document his / the claims management firm’s (to whom he paid £259 for the privilege), fraud by false representation. I am trying to muster up the energy(and time) to do the regulator’s job for them and take a trip down to the local Fraud Section. Having a police background myself I know that the time elapsed since the CI (not even PPI) policy was taken out may be an issue in terms of accuracy and reliability of recollection – but why should I be doing the regulator’s job in the first place? As for incidences where no policy existed in the first place this must be a case of almost an ‘absolute’ offence and much more easily prosecuted. But then again, if you are sitting in the MoJ what is the incentive to do more than the very minimum? In fact prosecuting some of these firms and thereby perhaps causing others to fold anyway may not be in your best employment interests? Or may just serve to confirm that the regulator has allowed an awful lot of criminal activity to happen ‘on their watch’ – a la the FSA backing down from individual registration of mortgage / DI advisers (most are great people but there are some pretty fraudulent apples in there too which perhaps the FSA may not be too keen to bring to light).

  7. 700 x 5 = 3,500 claims instigation companies, which is pretty incredible for a sub-industry virtually unknown only a few years ago. Talk about cowboys climbing aboard the bandwagon. The fact that already 700 of them have been shut down tells its own story as well.

  8. Only 2,800 to go and we can sleep at night and spend less time answering the phone to cretinous messages full of duplicity and scare-mongering.

  9. Thats going to be most of Sky’s advertising Revenue gawn…… shame……

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