The government is looking to change the way Claims Management Companies are regulated, but will the proposed rules go far enough to protect us? Our guest, Baroness Altmann, thinks more can be done.
The Financial Guidance and Claims Bill is currently making its way through Parliament. It’s a Bill that will move the regulation of Claims Management Companies (CMCs) to the Financial Conduct Authority (FCA), which is undoubtedly a good thing.
However, the Bill presents us with a real opportunity to ensure there are also tougher rules for CMCs, and I’ve been pushing the government to introduce other much-needed changes to improve the situation for people.
Nuisance calls
No one should be harassed by a company calling them without consent. The government’s recent support for a ban on pensions cold calling represents a major step forward for protection of people against pension scams. But such a ban is also urgently required for CMCs.
Findings from Which? highlight the scale of the problem of nuisance calls, with calls about PPI (from CMCs) the most common type.
Between July 2016 and June 2017, the Which? nuisance calls reporting tool received 23,231 reports of nuisance calls and texts. Of these, 4,468 were about accident claims, and 1,028 were about PPI.
Similarly, figures from the Association of Personal Injury Lawyers show that an estimated 51 million cold calls from CMCs are received each year.
It is critical that we protect the public from these nuisance calls and texts.
That’s why a number of my fellow peers and I proposed amendments to the Bill that would ban cold calling from claims firms.
Despite support from all parties, the government’s view is that a ban isn’t needed at the moment, and the FCA’s regulation of CMCs will help to toughen the oversight of nuisance calls.
We have also tried to include a ban on pensions cold calling in this Bill, too, but so far the government has refused to agree to take this opportunity to introduce such measures.
What else needs to be done?
There are other changes that need to be introduced if we’re really going to overhaul the claims management industry for the better. The government has already expressed support for a charge cap on the excessive fees currently charged by CMCs, but it is my view that this can, and should, be taken further.
According to the Ministry of Justice, the average commission charged for a PPI claim is 25%-30%. The National Audit Office estimates that CMCs earned between £3.8 and £5 billion just from PPI mis-selling compensation between April 2011 and April 2015. This is money that could have gone directly to claimants.
Which? has suggested that firms, rather than claimants, should be required to pay CMC charges when they are at fault. Not only would this result in more people receiving all of the compensation they are owed, but it would also encourage businesses to set up simpler and easier claims processes.
When I raised this in the House of Lords, the government noted that the FCA should look at it and confirmed that it has the power to make this change.
Over to you…
The Bill now passes to report stage, where some of the issues will be debated again.
I would be interested in your views on banning nuisance calls from CMCs, and more generally, your thoughts on improving the claims market.
So, what more should we be doing for people when it comes to protecting them against the sharp practices of CMCs?
This is a guest post by Baroness Ros Altmann. All views expressed here are her own and not necessarily those also shared by Which?.
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