Corporate report

CMR enforcement actions: January to March 2015

Updated 28 May 2015

1. Live investigations and recent actions

Part of the role of the Claims Management Regulator (CMR) is to ensure that authorised claims management companies (CMCs) have understood and are operating in line with the rules they’ve agreed to follow.

We publish regularly updated information on recent enforcement actions and investigations.

2. Actions: January to March 2015

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

Between January and March 2015, the regulator took the following action:

• 15 investigations started
• 3 licences cancelled
• 61 warnings issued
• 26 visits to CMCs
• 97 audits carried out

3. Latest activities

The regulator is taking action to deal with consumer and business concerns in a range of areas.

3.1 PPI and other financial claims handling

The practices of some CMCs specialising in financial claims, particularly mis-sold payment protection insurance (PPI) and mis-sold packaged bank accounts (PBAs), continue to concern consumers and the financial services industry.

The regulator took the following measures to increase compliance in this sector and to strengthen enforcement action:

Actions	Outcome
Enforcement action	Warned 39 CMCs for a range of serious issues in relation to complaint handling, marketing activities and submitting inadequately completed PPI consumer questionnaires to the Financial Ombudsman Service. We also cancelled the authorisation of one CMC during this period.
Investigations	5 CMCs are currently under investigation.
Audits and visits	Audited 40 CMCs which included a number of re-audits to check if they had followed the advice we had given during previous audits. Some CMCs received warnings following the audit findings. CMCs are assessed and selected for audits based on the intelligence we receive and the risk they pose. We have ongoing concerns about the activities of some CMCs specialising in packaged bank account claims and are monitoring this market closely as part of our programme of audits and visits. Some CMCs have been presenting poorly prepared claims to banks and others have been seeking to prevent banks from communicating directly with their customers. We are improving compliance in this area through advice and warnings.

3.2 Nuisance calls and texts

The number of unwanted marketing calls and spam text messages continues to be a serious concern for CMR and other regulators with primary responsibility in this area - Information Commissioner’s Office (ICO) and Ofcom. The regulator is working closely with these organisations to identify and take action against those companies that break the rules.

The regulator took the following action:

• audited 20 CMCs engaged in direct marketing
• warned 12 CMCs engaged in lead generation
• identified 8 direct marketing businesses potentially engaged in providing regulated claims management services without authorisation
• continued our investigations into 1 CMC and began new investigations into 3 CMCs potentially engaged in non-compliant direct marketing
• commenced two new investigations into CMCs potentially engaged in non-compliant direct marketing
• shared information with the ICO that led to a joint entry warrant to the premises of a business believed to be generating leads by making millions of automated calls

3.3 Personal injury: referral fee ban

A ban on CMCs, solicitors and insurers paying or receiving referral fees in personal injury cases has been in place since 1 April 2013. Industry regulators have been closely monitoring related activity. CMR is monitoring how CMCs have adapted to the ban through a proactive programme of compliance activities.

The regulator took the following action:

• audited 77 CMCs
• issued 3 warnings
• brought 59 CMCs to compliance (76%)
• continued to work closely with partners such as the Solicitors Regulation Authority (SRA) and the Financial Conduct Authority, sharing information and raising issues as they emerge

Since the referral fee ban came into effect in April 2013, we have visited 946 CMCs and have followed this up with a programme of audits and visits to make sure those CMCs continue to follow the rules. We have audited and visited 380 CMCs between April 2014 and March 2015. At the start of 2014, around 1,400 CMCs were operating in the personal injury market. This fell to 979 at the end of March 2015.

3.4 Insurance fraud

The regulator works with the Insurance Fraud Bureau (IFB) and the City of London Police’s Insurance Fraud Enforcement Department (IFED) to disrupt criminal operations. During the last quarter, CMR continued to deal with CMCs identified as processing stolen personal data from insurance claims and collect intelligence from different sources on CMCs involved in other fraudulent activities. We have contributed to the work of the government-led Insurance Fraud Taskforce, which was established to look into the problem of fraudulent behaviour and to recommend solutions to decrease the level of insurance fraud. The work of the taskforce is intended to protect the interests of consumers and complement that of other agencies already working in this area, such as the IFB and the IFED.

The regulator took the following action:

• Shared intelligence with HM Revenue and Customs (HMRC) on CMCs involved in tax evasion and forged a constructive working relationship in the process. HMRC is now investigating those CMCs.
• Assisted Cheshire Police by giving live evidence at the trial of a director of a previously authorised CMC and a number of co-defendants for various fraud offences in respect of staged accidents. The director was convicted of 6 counts of conspiracy to defraud insurance companies and 1 count of fraud by failing to disclose information on his CMR application. He has since been sentenced to a total of 6 years and 6 months imprisonment. The trial took place at Manchester Crown Court.
• Began the process of applying to become a full time member of the Government Agency Intelligence Network, which will enhance our intelligence capability.
• Continued to work closely with the IFED, IFB and other partner agencies.