CONDUCT: businesses accused of cold-calling and misleading contracts following review


Many businesses that have applied for authorisation under the new regulatory regime for claims management are 'significantly breaching' the rules of conduct, it has emerged.



During the application process, the claims management regulation team at the Department for Constitutional Affairs (DCA) examines company websites, advertising material and contracts before firms are approved or exempted.



A DCA spokeswoman said: 'There are two principal problems - selling practices, in particular cold-calling, and misleading contracts.' Deceptive marketing in hospitals and contrived accidents leading to fraudulent claims were also common examples of malpractice.



Mark Boleat, head of claims management regulation at the DCA, said: 'These breaches must be rectified. Those whose applications have yet to be approved are well advised to check their websites and contracts.'



From 23 April, when the Compensation Act 2006 comes into force, any business providing regulated claims management services that is not authorised, exempt or subject to a waiver will be committing an offence.



Solicitors have been warned they may face disciplinary sanctions if they deal with unauthorised firms. While law firms are exempt from requiring authorisation, separate law firm marketing arms are required to apply.



More than 1,000 applications for authorisation were submitted before the 16 February deadline - far more than initially expected. In excess of 100 firms applied after the cut-off date and may not be dealt with before 23 April. Late applicants were warned by the DCA that they should not assume they can continue trading after 23 April.



Mr Boleat acknowledged some rogue firms could be 'playing for time' by applying late. 'You can never get it 100% right, but I am satisfied we have adequate resources to have a significant impact on, and reduce significantly the extent of, non-compliance,' he said.



The regulator will enforce regulation using mystery shoppers, surveys, inspections of businesses and intelligence information.



l Andrew Twambley, senior partner of Manchester law firm Amelans, has resigned as chairman of the Claims Standards Council, the trade body for the claims management sector. 'It is with regret that I have decided to resign, but due to a change in my own business strategy I feel that I am not able to commit to the role full-time,' he told the council's executive.



Anita Rice