CMCR to enforce repayment of "unjustifiable fees"

The interim claims management company regulator (CMCR) will have the powers to force companies to repay "unjustifiable fees", Insurance Times has learned.

In a letter to Lord Hunt from the Department for Constitutional Affairs (DCA), Baroness Ashton wrote that the CMCR would have the power of "directing the authorised person to apologise, redo the work and/or repay unjustifiable fees.

"The regulator will also be able to impose sanctions against the authorised person if there has been a breach of the conduct rules, including attaching conditions to the authorisation or suspending or cancelling it."

When the new legal service regulatory regime comes into place, she continued, complaints handling will come under the proposed Office of Legal Complaints.

It follows Lord Hunt's concerns that the regulator may not have powers to compensate a claimant if it were found guilty of abuse.

He was also apprehensive that CMCs would not be required to carry prof-essional indemnity insurance. But Baroness Ashton rebuffed this claim.

She wrote: "It is the intention that authorised persons should be required to have professional indemnity insurance, but we want to ensure that the requirement is introduced in an appropriate way and that there is sufficient market capacity to provide the relevant insurance."

Claimants will also be given a 14-day get-out clause, where they will be automatically entitled to withdraw the claims before incurring any costs.

Baroness Ashton also makes clear that the FSA will be responsible for regulation of third party capture claims. The minister said the City watchdog has "clarified that the handling of insurance claims by insurers is regulated under the Financial Services and Markets Act 2000."