The Claims Standards Council believes the onset of claim-chaser regulation will rid the sector of rogue operators as rule-breakers could face a two-year prison sentence.
Speaking at an extraordinary general meeting of the CSC to ratify its executive, new chairman Andrew Twambley said the regulations will be “a very uncomfortable read” for any claim firms with something to hide.
He said the penalties of withholding information or lying on an application form include a custodial sentence and should scare off unscrupulous individuals. The CSC has become a trade body in the run-up to regulation and is moving from London to Manchester.
The Department for Constitutional Affairs will oversee regulation which will be supervised nationally by Staffordshire County Council trading standards from next April.
Brunel Franklin director Anthony Sultan, who is on the CSC’s new executive committee, said “cowboy operators” will no longer be able to survive. He said although the formal regulations come too late to have a major effect on the endowment sector, unless the firm is successful in over-turning time-bar rules, it will be useful in other potential areas of contention, such as bonds, payment protection insurance and contracting out.
Sultan hopes that now the CSC has been reborn as a trade body it can help with issues of mutual interest, such as consistency of decision by the Financial Ombudsman Service.
Sultan said: “Brunel Franklin has always pushed hard for regulation and we are finally about it see it kick in. It is probably too late to have a major effect on the endowment sector but it is very positive.”