For large CMCs the fines could be as much as 20% of their annual turnover

Rogue claims management companies (CMCs) will be hit with large fines up to a fifth of their annual turnover, Justice Minister Lord Faulks announced today in further measures to rid the industry of bad firms.

CMCs that flout the rules will now be fined for breaches including using information gathered via unlawful unsolicited calls and texts, wasting people’s time and money by making spurious or unsubstantiated claims, and misleading marketing.

The fines, to be introduced later this year, will be based on the turnover of the company and the nature of the offences.

For large claims firms the fines could be up to 20% of their annual turnover.

Since the referral fee ban was introduced in April 2013 the number of CMCs registered to handle personal injury claims has fallen by 37% to 1,200 from 1,902.

The new fines are the latest in a series of measures by the Ministry of Justice (MoJ) to rid the market of rogue firms. These measures include appointing additional enforcement staff, banning firms from taking fees from customers before a contract has been signed, and naming firms that are subject to enforcement action or under investigation.

Lord Faulks added: “No longer should claims companies be able to plague hardworking people and waste everyone’s time. The scale of these fines shows just how serious we are about stopping them.

“This is also good news for the reputable firms in this industry, as it will boost confidence in the services provided by the sector.”

The rules will be set by the Claims Management Regulation (CMR) unit at the MoJ.

In May, the first two independent non executive board members – Carol Brady and Caroline Wayman were appointed to the executive-led CMR board.