Corporate report

CMR enforcement actions: July to September 2014

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: July to September 2014

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

In the second quarter of the financial year (July to September 2014), these actions included:

• 23 visits to CMCs
• 144 audits carried out
• 25 investigations started
• 48 warnings issued
• 16 licences cancelled

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), continue to concern consumers and the financial services industry.

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

Actions	Outcome
Warnings	Warned just under 20 CMCs for a range of serious issues in relation to complaint handling, marketing activities and substantiating documentation, in particular, letters of authority and the Financial Ombudsman Service’s PPI consumer questionnaire.
Investigations	6 CMCs are currently under investigation and 1 investigation was concluded in this period. We are currently considering a number of CMCs for investigation.
Formal enforcement action	Cancelled the authorisation of 6 CMCs for failure to pay their annual regulation fee. Further cancellations are expected to follow shortly.
Audits	Audited over 40 CMCs which included a number of re-audits to check if they had followed the advice we had given during previous audits. 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.
Amendments to Conduct Rules	Began preparations for implementing changes to the Conduct of Authorised Persons Rules, which came into force on 1 October 2014. In September we published guidance on how the new rules should be followed and examples of best practice. As part of this process, we held informal consultations with relevant stakeholders from the financial services industry, such as the Financial Conduct Authority (FCA) and representative bodies.

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, especially those that collect and sell personal data.

The regulator took the following actions:

• audited 38 CMCs engaged in direct marketing
• warned 6 CMCs engaged in lead generation
• identified 7 direct marketing businesses potentially engaged in providing regulated claims management services without authorisation
• continued investigations into 2 CMCs and began new investigations into 2 CMCs potentially engaged in non-compliant direct marketing
• concluded our investigation into the former CMC, Jayesh Shah (also trading as Vintels) which surrendered its authorisation on 28 July 2014
• continued investigations into 2 unauthorised business believed to be involved in lead generation
• shared information with the ICO regarding an unauthorised business, and subsequently took part in a joint entry warrant with them

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 are adapting to the ban through a proactive programme of compliance activities. In the second quarter of the financial year (July to September 2014), the regulator took the following actions:

• audited 97 CMCs
• issued 10 warnings
• brought 65 CMCs to compliance
• 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, the regulator has visited 946 CMCs and audited 204 to ensure they are following the rules. A minimum of 236 CMCs (25% of those that we previously visited) will be audited by the end of March 2015. At the start of 2013, around 2,300 CMCs were operating in the personal injury market. This fell to just under 1,140 at the end of September 2014.

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 second quarter of 2014, CMR continued to focus on CMCs processing stolen personal data from insurance claims.

CMR has agreements with over 20 police forces around the country, providing statements and evidence to them.

In the second quarter of the financial year (July to September 2014), the regulator took the following action:

• Assisted City of London Police and the IFB with an ongoing operation
• Assisted with an investigation and provided evidence in relation to the prosecution of a police officer involved in criminality
• Conducted 6 audits of CMCs
• Continued to work with a range of enforcement agencies, including the IFB, IFED, ICO, and SRA to deal with data theft and associated criminality