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Mortgage chasers to escape regulation

Claim-chasers in the mortgage market could be exempt from regulation once the Compensation Act comes into force.

The Department for Constitutional Affairs’ head of claim regulation Mark Boleat admits that a loophole may exist for firms whose claims are not based on the sale of a product.

At present, legislation will only apply to those who help consumers claim over a mis-sell. But some claim companies, such as Loancheck are working on claims over the calculation of fees and interest charged. The regulation of claim firms is likely to begin in April 2007.

Boleat says: “Regulation covers any claim management company but we want to limit the scope to where the detriment is, which is the sale of financial products. If people think the scope should be extended we could look at that during consultation.”

Claims Standards Council spokesman Andy Wigmore has warned that the council has identified a number of rogue claim firms moving into the mortgage market.

He says some are pocketing fees to conduct an assessment of whether a claim can be pursued and running off with the customers’ money without checking whether there was a valid claim in the first place.

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