Corporate report

Claims Management Regulator: enforcement actions April to June 2017

Updated 27 April 2018

This was published under the 2016 to 2019 May Conservative government

1. Live investigations and recent actions

The Claims Management Regulator (CMR) publishes updated information on recent enforcement actions and investigations.

2. Actions: April to June 2017

The regulator uses its powers to take action against authorised claims management companies (CMCs) and individuals who don’t meet the required standards.

Between April and June 2017, the regulator took the following action:

Activity	April to June 2017
Investigations started into authorised CMCs	11
Investigations started into unauthorised CMCs	4
Licences cancelled	2
Financial penalties issued	1
Warnings issued	77
Audits conducted	105
Visits conducted	107

3. Personal injury claims

CMR closely monitors CMCs operating in the personal injury market through a programme of audits and visits. The regulator has been targeting CMCs that are operating call centres established as misleading consumers, and identifying suspected fraudulent and other criminal activity.

This quarter the regulator took the following action:

• Audited 70 CMCs and issued advice notices to those that were non-compliant with the referral fee ban, general rules and regulation
• Issued 16 warnings
• Visited 19 CMCs

3.1 Holiday sickness claims

CMR is investigating the conduct of regulated CMCs and unauthorised entities in relation to a surge in holiday sickness claims. The regulator has also established a dedicated project team to monitor this sector closely, and deal quickly and effectively with any misconduct by regulated CMCs, or those who are simply operating completely illegally. CMR has set the following compliance priorities to tackle misconduct in this sector:

• Identify those CMCs using agents in resorts where face-to-face cold calling is carried out
• Address misleading marketing
• Monitor telemarketers who are sourcing and using data legitimately
• Ensure that the activities of CMCs are not likely to place solicitors in breach of their code
• Deal with unauthorised activity effectively.

This quarter CMR has taken the following action:

• Identified and mapped CMCs offering holiday sickness claims services. This is an ongoing exercise as activity continues to grow in this area
• In April, we initiated a program of targeted holiday sickness audits. Over 40 CMCs have now been audited or visited, and received compliance advice
• Issued 6 warnings to CMCs
• Started investigating 2 CMCs operating in holiday sickness
• Identified over 30 unauthorised CMCs and took appropriate action
• Removed the websites of 6 unauthorised CMCs
• Worked closely with the Solicitors Regulation Authority (SRA) and Association of British Travel Agents (ABTA) members who have provided intelligence, information and evidence about market practices. CMR has also shared intelligence with the SRA about solicitors suspected of malpractice
• Formed a multi-disciplinary group to help draw out key intelligence and agree actions from key external parties
• Met with a number of holiday companies and representative bodies to improve intelligence sharing processes and to efficiently identify and target non-compliant CMCs.

Plans to clamp down on bogus holiday sickness claims were announced by ministers on 9 July 2017.

3.2 Fraudulent activity

The regulator collects intelligence from different sources on CMCs involved in fraudulent activities. Some of the actions taken by the regulator to disrupt criminal activity this quarter included:

• Working with enforcement partners regarding holiday sickness claims
• Attending Insurance Fraud Bureau (IFB) Forums and working closely with the IFB and partners from the insurance industry to share actionable intelligence
• Attending Government Agency Intelligence Network meetings and responding to referrals from partners in relation to ongoing criminal investigations
• Attending Police Intelligence forums in order to disrupt organised crime groups (OCGs), in particular those involving CMCs
• Meeting with stakeholders in relation to an ongoing investigation and agreeing outcomes

4. Nuisance calls and texts

Nuisance calls and texts remain a key compliance priority for CMR. The regulator scrutinises CMCs’ handling of data and leads for direct marketing and participates in multi-agency initiatives to tackle nuisance calls and texts. This includes working closely with the Information Commissioners Office(ICO) and other regulators to identify and take action against those companies that engage in non-compliant marketing.

The regulator took the following action this quarter:

• Audited 22 CMCs engaged in direct marketing and issued comprehensive written advice
• Issued 15 warnings to CMCs engaged in non-compliant direct marketing
• Cancelled the authorisation of Barrington Claims Ltd for failing to allow consumers sufficient time to read a contract, providing misleading information during telephone calls, and for rule breaches relating to due diligence amongst other issues
• Started new investigations into 5 CMCs and progressed formal investigations into a further 21 CMCs
• Participated in Operation LINDEN – a cross-industry working group involving other regulators, consumer groups, trade associations and industry to share intelligence and co-ordinate activity in relation to nuisance calls and texts
• Continued to work closely with the ICO, Ofcom and the Advertising Standards Authority (ASA) to assist with investigations

5. PPI and other financial claims

Complaints about mis-sold PPI remain the most active area in the financial claims sector. CMR continues to prioritise and tackle malpractice in this sector on a risk assessed basis, and in particular where there is a risk of substantial consumer detriment.

The regulator took the following action during this quarter:

• Audited 29 CMCs
• Continued investigations into 17 CMCs
• Started 2 new investigations
• Issued 9 warnings to CMCs
• Cancelled the authorisation of Your Money Rights Ltd for misleading sales calls, high pressure selling, failing to allow clients sufficient time to consider information before contracting with them, and providing the regulator with false and misleading information.

6. Unauthorised trading

CMR has further intensified its work to tackle unauthorised trading, including restructuring its dedicated team to build further capacity. CMR is working with partner agencies to improve intelligence gathering and detection, and take appropriate action on a risk assessed basis. The regulator is also focused on tackling the unauthorised elements of the holiday sickness claims market.

During the last quarter CMR received 140 notifications of businesses trading without authorisation, which were all assessed and the following action taken:

• Issued 25 letters of warning to CMCs providing personal injury and financial claims services without authorisation
• Started investigations into 4 unauthorised CMCs
• Removed the website of 1 unauthorised CMC

CMR is also currently in the process of conducting a number of complex criminal investigations involving multiple defendants.

7. Promoting compliance

CMR is proactive in supporting CMCs to comply with conduct rules prior to enforcement action being pursued. This is promoted through our regular business bulletins, published guidance and business advice line. Our business bulletin provides compliance information and guidance in relation to recent ASA rulings, Refer a Friend Schemes, and the FCA’s announcement on the deadline for PPI complaints.

8. Claims Management Regulation 10th Anniversary Publication

April 2017 marked 10 years since CMR started taking action to clamp down on rogue CMCs. To mark this, CMR has published a special report which highlights the significant steps it has taken to clean-up the claims industry during this period.

9. Other news

The Insolvency Service announced that Dean Anthony Spencer, the director of Claim & Gain Limited received a 10 year ban for misleading customers and breaching government regulations. The ban will prevent him from directly or indirectly becoming involved in the promotion, formation or management of a company for the duration of the term. This follows an investigation and subsequent warnings from CMR, where Mr Spencer failed to rectify the breaches and continued to mislead customers by taking ‘upfront’ fees from a further 149 customers.