In the race to Room 101, claims management companies (CMCs) are rivaled in the public mind only by chuggers and those ‘freshen up’ toilet attendants.
But unlike those second two groups, there is never the satisfaction of telling them in person where to go. The most irritating CMCs are a faceless operation, ringing with pre-recorded messages or sending texts from unrecognised numbers.
The government has now given us an outlet for our anger, by handing the Legal Ombudsman responsibility for dealing with complaints about CMCs. Crucially, the ombudsman will have the power to award compensation, a power never granted to the Ministry of Justice.
Rather brilliantly, the MoJ has managed to secure a day of ‘crackdown on rogue CMCs’ headlines by essentially waiving its responsibility to deal with complaints itself. Its Claims Management Regulation Unit may have cancelled, suspended or warned more than 400 CMCs in the past year, but there is little evidence they have come close to cracking down on rogue elements. Instead the job is passed onto LeO – but can we be sure it will be up to the task?
The basic figures suggest this is like asking a local bobby to take on the Essex lion armed only with a truncheon and handcuffs. In the past year, the MoJ’s claims management regulation section dealt with 9,131 complaints from consumers. More than nine in every 10 of these was related to financial products and services (mostly related to PPI claims).
During the same year, the Legal Ombudsman accepted 8,420 cases from people complaining about law firms, more than double the number it dealt with in the previous 12 months.
There is certainly scope within the service for growth, but the ombudsman’s office is likely to face a deluge of calls once consumers know they have an outlet for their complaint (few, if any, would have been aware of the MoJ’s Claims Management Regulation Unit).
The rate of PPI claims-farming shows no sign of abating, which can only lead to more complaints. Chief ombudsman Adam Sampson, whilst welcoming the move overall, pointedly noted that the priority now will be to accept complaints ‘once all the necessary arrangements in place’.
Investigating rogue CMC practices will be time-consuming and a drain on resources and manpower. Remedies will not be as easy to fix and the public wanting CMC heads on a stick may not be happy with the ombudsman’s current record of making decisions in 35% of cases.
By siphoning off complaints handling to the ombudsman, this will give the regulation unit the freedom to fully investigate the biggest rogues. But the ombudsman will need extra resources to deal with an industry that is better organised and more widespread than ever. Consumers have more rights as a result of this announcement, but they will stand for little if the complaints handler is not properly equipped to exercise them.
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