Tougher regulation needed to combat rogue claims companies, says industry body
The FCA should be given the authority to crack down on rogue claims management companies, according to the ABI.
In its submission to the government’s review of claims management regulation announced by Chancellor of the Exchequer George Osborne in his July budget, the ABI has called for oversight of CMCs to be given to the FCA.
“Tougher regulation is needed to protect the public from rogue CMCs that plague people with nuisance calls, charge high fees and push up the cost of insurance for honest customers,” the ABI.
“The current system is failing to provide enough of a deterrent to rogue firms,” the industry body said.
The ABI pointed out that in 2014/15, 23% of all CMCs faced some sort of regulatory intervention from their current regulator, the Ministry of Justice’s Claims Management Regulator. They were either given a warning or had their authorisation cancelled. That number rose from 18% in 2012/13.
Recent ABI research found 83% of people have been contacted by a CMC encouraging them to claim compensation, for personal injury or other financial loss. Out of those receiving the calls, 92% said that the contact had no relevance to them.
So far this year the Information Commissioner’s Office has received almost 49,000 calls about nuisance communications relating to accident and PPI claims.
The Insurance Fraud Bureau currently has 56 CMCs under investigation as part of staged motor accident scams.
“For too long some claims management companies have helped fuel a compensation culture through nuisance calls, misleading adverts and high charges,” ABI general insurance manager Rob Cummings, said.
“Tougher supervision should drive the cowboy operators out of town and ensure that honest customer do not end up footing the bill for the rogue firms.”