The Ministry of Justice has closed around one in five claim management companies in the last year and almost doubled the number of MoJ staff responsible for regulating claim 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 claim firms in the year to the end of March, brining the total number of authorised claim firms to 3,018.
The number of MoJ staff allocated to regulating claim firms has risen from 32 in 2007, when the MoJ took over claim management regulation, to 57.
The MoJ has set up a dedicated team to deal with poor practices by rogue claim firms which solicit claims for missold payment protection insurance.
The MoJ launched an investigation last month into claim firms after providers complained of a wave of invalid compensation claims on behalf of customers allegedly missold PPI.
Claim firms accounted for over three-quarters of PPI claims received by the Financial Services Compensation Scheme between 2008 and 2011. Claim firms also accounted for nearly half of all cases received by the Financial Ombudsman Service during 2011.
Highclere Financial Services partner Alan Lakey says: “I want to see the MoJ take more action, particularly where claim firms are bringing unfounded complaints.”