The stories we hear from consumers about rogue claims management companies never cease to shock me. And although the Ministry of Justice is tightening up the rules, the changes made are not bold enough.
I recall the story of one 83-year-old Which? member who answered a nuisance call from a claims management company (CMC), which told him he was owed money from mis-sold payment protection insurance (PPI).
He gave them his bank details so that they could check how much he was owed, and in doing so they deducted £299 from his bank account. He hadn’t signed anything, nor had he given them verbal authority to do so.
This is just one of many similar tales that lead to stress and financial harm for people who have already suffered from the initial mis-selling of PPI by the banks. It’s doubly frustrating when you consider that you can easily reclaim PPI yourself for free.
Do new CMC rules go far enough?
With this story in mind, new rules announced by the Claims Management Regulator (part of the Ministry of Justice) are a step in the right direction. But we want to see much bolder action to clean up the claims industry.
You’ll now have to sign a contract before a CMC is allowed to take any money from your account. We also welcome the fact that these companies will have to publish their terms and conditions online. CMCs must also tell their clients if the company has been suspended, or if restrictions have been imposed on their business within 14 days of any enforcement action being taken.
However, the claims industry is riddled with bad practice and unscrupulous businesses with little regard for their customers. At Which? we think upfront fees should be banned and those in charge of claims firms properly held to account for bad behaviour, with hefty fines imposed, licences revoked and individuals barred from running CMCs if they’re found guilty of breaking the rules.
Until the people in charge of these companies face real consequences for breaking the rules, much of the industry has no incentive to change.
Do you think the new rules go far enough? And if you’ve used a CMC, do you think the new rules will have made your experience any different?