Firms that bombard people with cold calls and texts face big fines, government says
Claims management firms (CMCs) that rely on unsolicited calls and texts face large fines under law changes announced by the government yesterday.
The fines will be brought in as part of law changes being made through the Financial Services (Banking Reform) Bill which is currently progressing through parliament.
They are expected to take effect next year, when further details of the maximum fine levels will be published.
The new rules are being introduced as part of a package of work by the government to crack down on “rogue firms” that are “responsible for bombarding the public with misleading advertising and flooding banks with unsubstantiated claims for compensation – at a cost to other customers”.
In addition to the fines, the Claims Management Regulation Unit at the Ministry of Justice will also be expanded with more enforcement staff. The government says this move will be funded by increased fees paid by regulated claims firms.
It added that a new set of toughened conduct rules would be unveiled this week, aimed at cracking down on abuses by CMCs.
Justice Minister Shailesh Vara said: “We will not tolerate companies that 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.”
Financial secretary to the Treasury Sajid Javid added: “These new rules will put PPI [payment protection insurance] claims pests in their place.
“Cold-call companies that bother the public will now have one less reason to do so.
“This will also help free up the banks to pay legitimate claims more quickly.”
Commenting on the reforms, Which? executive director Richard Lloyd said: “It’s right to bring in bigger fines and tougher enforcement for rogue claims companies who are bombarding consumers with nuisance calls and exploiting people who can easily claim PPI and other compensation for free themselves.
“The Government must now go further and strengthen the law so all regulators have more powers to crack down on unscrupulous firms making nuisance calls and giving people greater control over their personal data.”