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MoJ given new powers to tackle unethical claims firms

Ministry of Justice

New plans due to come into force in 2014 will see The Ministry of Justice (MoJ) given new powers to tackle claims firms who undertake unethical procedures. These include using information gathered by ‘cold calls’ and texts, providing clients with low standard services or constantly bombarding the public with false advertising about compensation.

We’ve all had an automated phone call telling us that we can claim back our payment protection insurance (PPI), even if we never bought the product or service. These firms will now be targeted by the MoJ as part of the changes being enforced by the Financial Services Banking Reform Bill.

Banks have even complained that some claims management companies are sending them inaccurate and incomplete claims. These in turn have cost the banks thousands of pounds in unnecessary costs and delays which could have been spent on genuine claims.

Government crackdown on claims firms

The purpose of the changes are to ensure that the claims management industry provides only the best possible results and services to its customers. The new MoJ powers are also designed to help the banks as claims companies will need to ensure that any claims they put forward have a realistic chance of success while ensuring that all the evidence is provided in full.

Finally claims management firms will be required to carry out a full audit of how they collect data so that they can no longer hide whether they collected the data through legitimate methods or illegally.

In order to achieve their goals the Claims Management Regulation (CMR) unit inside the Ministry of Justice will be expanded to include more enforcement staff and new rules of conduct will be announced to tackle the issues of unethical companies.

It is hoped that by giving the MoJ these extra powers the government will be able to continue its mission of shutting down claims management companies that practise unethical procedures. The Government has already taken substantial action over the last few years, resulting in over 1,000 unethical claims firms closing down; there are now 2,300 claims firms in operation compared to 3,400 in 2011.

Any claims firm found to be practising techniques deemed unethical by the MoJ are likely to be subject to a fine. The details of these fines will be revealed next year when the new powers take effect.

Speaking about the new regulations, Justice Minister Shailesh Vara said:

“We will not tolerate companies which waste hardworking people’s time and money through their own laziness, incompetence or frankly dubious practices. We are already making sure rogue companies are shut down – and now we are ensuring those who are wasting everyone’s time will pay for it”.

Although we don’t specialise in PPI claims we at Fonseca & Partners are still bound by law set out by the CMR and MoJ, and we welcome the decision to award the MoJ new powers to tackle the issue of unethical claims management companies. If you've suffered a personal injury please get in touch with us today. You can be sure that we’ll handle your case both professionally and ethically and win you any compensation you may be entitled to.