Still work to be done to stamp out cold calling

The Ministry of Justice has declared that cold calling and claims farming activity in hospitals have been dealt a severe blow following the implementation of the Compensation Act.

Speaking at the Insurance Times Future of Personal Injury Claims Conference, Mark Boleat, head of regulation at the MoJ, said that the stamping out of cold calling had been “largely successful”. However, Boleat said more work needed to be done on “lower level” cold calling, for example on council estates.

Unauthorised marketing in hospitals has been reduced by between 80 and 90%, he told delegates.

Boleat also said the issue of accident management companies and contrived accidents had become a priority for the claims regulator.

Two businesses had already been refused authorisation because of their suspected involvement in cash for crash scams, and a number of other “significant targets” were being actively investigated, Boleat said.

“We have a strategy for dealing with contrived accidents, involving close cooperation with other enforcement agencies and the insurance industry,” Boleat continued.

He said a senior fraud practitioner from Zurich had been seconded to help regulate the activities of CMCs.

Boleat added that malpractice by companies handling claims against the Criminal Injuries Compensation Authority had been substantially reduced, with some companies voluntarily leaving the market.

In addition, it is believed that the misleading use of ‘no win, no fee’ has “largely been eliminated," he added.

Boleat also pointed to successful attempts to enforce electronic commerce and Companies Act regulation, which stipulates that websites of businesses must have physical addresses and must disclose their authorisation place and number on their website.

“If you now look at a claims management company websites you will see lots of asterisks with qualifications,” Boleat said, adding: “We are probably ahead of most of the rest of British industry and commerce in that respect.”

But he added it was too early to declare victory, pointing out that being authorised and causing illegal activity were not the same thing.

“Rules that are not enforced are worse than no rules,” he said. “They simply give those engaged in malpractice a halo of respectability and call into question the credibility of regulation.

“People are not going to walk the streets, hammering on doors for business – unless they can sell it.”

Legislation requiring claims management companies gain authorisation to operate came into effect in April. 1,300 businesses have sought authorisation from the MoJ since November.