I feel fairly sure that I am not the only person to be extremely relieved to hear that the Ministry of Justice has launched a consultation proposing tough new rules on claim management companies. It will include plans to stop these firms agreeing verbal contracts to submit complaints before fees are taken.
I received a call from one such company recently referring to a loan I had apparently taken out in the last three years and they insisted that I should claim. Normally I just put the phone down but as I knew I have taken out no such loan I decided to see exactly how far they would go… So I asked if he had details of the loan that I had taken out to which he confidently answered “yes” so when I asked who it was with he named a high-street lender.
By now I was pretty annoyed, so I requested when it was taken out, how much it was and what the reference number was, to which he replied: “You know all those details which is why you can claim”.
Despite insisting that he transferred me to his manager, he carried on with his spiel and after several assertive requests by me to speak to someone in charge, he slammed the phone down and, of course, the number was withheld. I was fuming, not only because it was blatant lies but also that they can be so unaccountable when in today’s world we are all highly regulated to ensure the best levels of consumer protection are adhered to.
So I am really pleased that action is at last on the cards and there are three main amendments to the rules:
1) CMCs can only agree contracts in writing with their clients before any fees can be taken
2) CMCs will be required to inform their clients of any suspension or variation to the business authorisation once in effect
3) CMCs can only now refer to being regulated by the CMR as opposed to the Ministry of Justice, which could have been construed as “endorsement” from the MoJ.
This is a good step forward because yet again it is the advisers that get hit when these spurious complaints cost everyone a huge amount of time, money and use up valuable free case fees.
The CMR consultation aims to stop consumers feeling the unnecessary stress and concern associated with these calls as many will worry that they genuinely did take a loan or someone else has in their name and will therefore be unsure on what they can do next and what the implications are. The consultation closes on 3 October 2012 and Kevin Rousell, head of claims management regulation at the Ministry of Justice, wants people to be happy and clear about exactly what the deal is before they part with any money. His plans are intended to ensure the industry is subjected to radical changes over the next 12 months with tougher rules put in place to drive malpractice out of the industry. The CMR consultation aims to give consumers and industry members an opportunity to shape the proposals. The consultation closes on 3 October 2012, which gives everyone the opportunity to have their say to ensure that this type of telephone bullying and blatant lying is outlawed.
Sally Laker is managing director of Mortgage Intelligence Holdings