Corporate report

CMR enforcement actions: October to December 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: October to December 2014

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

Between October and December 2014, the regulator took the following action:

• 15 investigations started
• 70 licences cancelled
• 51 warnings issued
• 22 visits to CMCs
• 89 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), continue to concern consumers and the financial services industry.

Between October and December 2014, the regulator took the following measures to increase compliance in this sector and to strengthen enforcement action:

Actions	Outcome
Warnings	Warned 23 CMCs for a range of serious issues in relation to marketing activities and unverified paperwork, 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 35 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.
Conduct Rules 2014	Changes to the Conduct of Authorised Persons Rules came into force on 1 October 2014. The new rules clarify the duty for CMCs to make sure the claims they are submitting have a realistic chance of success, as well as ensuring full evidence is provided to back up any allegations. CMCs must also make sure that any data they receive through telemarketing are legally obtained.

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.

Between October and December 2014, the regulator took the following action:

• audited 28 CMCs engaged in direct marketing
• warned 9 CMCs engaged in lead generation
• identified 2 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
• concluded our investigation into Complete Claim Solutions Ltd
• issued a caution to an unauthorised business believed to be involved in lead generation
• shared information with, and received information from the ICO regarding a number of authorised CMCs and unauthorised businesses
• conducted a joint audit of a CMC with the ICO

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.

Between October and December 2014, the regulator took the following action:

• audited 138 CMCs
• issued 3 warnings
• brought 42 CMCs to compliance (58%)
• 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, we have visited over 900 CMCs and have followed this up with a programme of audits to make sure those CMCs continue to follow the rules. We have audited 303 CMCs since April 2014. At the start of 2014, around 1,400 CMCs were operating in the personal injury market. This fell to around 1,000 CMCs at the end of December 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 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.

Between October and December 2014, the regulator took the following action:

• Shared information with IFED, City of London Police which resulted in arrests
• Assisted with police investigations and provided statements and evidence in relation to CMCs involved in criminal activities
• Shared intelligence with HM Revenue and Customs on CMCs involved in tax evasion
• Continued to work with a range of law enforcement agencies, including the police, IFB, IFED, ICO, SRA and HMRC to deal with data theft, fraud and associated criminality