The organisation that has taken on the role of regulating claims management companies in the UK is concerned that its hands are tied over complying with new European legislation geared against practices such as cold calling, owing to a conflict with domestic rules.

The Claims Standards Council (CSC) spoke out as the European Parliament approved the directive on unfair commercial practices, which prohibits behaviour by claims farmers that could be considered unfair, misleading or aggressive. The directive includes restrictions on cold calling and other 'pressure techniques' that push people into pursuing claims and taking out unsuitable loans and insurance to fund their cases.


The government has given the CSC until the end of the year to bring claims handlers into line, under the threat that it will step in itself if it does not see enough action.


CSC chief executive Anthony Burns-Howell said it originally intended to impose a total ban on cold calling, but had been told by the Office of Fair Trading that it would be improper under competition laws. 'Rather than find itself the subject of legal action, the CSC has decided reluctantly to delete the term "cold calling" [from its code of practice] and substitute "harassment" and similar techniques until the legal position is clearer,' he said. 'Until such clarification, the CSC and its members could meet only some but not all of the EU proposals - an unsatisfactory position from a regulatory standpoint.'


However, Dr Burns-Howell said it was still confident that it could do a good job in addressing who should provide claims advice and at what time, as well as scrutinising the quality of their services. 'The CSC codes will set clear benchmarks in these areas, especially requiring legal advice to be given by properly qualified persons,' he pledged.


An OFT spokeswoman admitted it had concerns about banning cold calling entirely, particularly if it meant businesses were not free to advertise, and argued that the directive did not impose a total ban but was designed to ensure that consumers had cooling-off periods and were not misled.


'The OFT's position is that banning cold calling to consumers may help protect vulnerable consumers in some circumstances,' she said. 'However, banning cold calling to businesses may have competition implications.'


Law Society chief executive Janet Paraskeva backed the approval of the directive, but agreed there could be problems implementing it. She said clients should see solicitors directly or approach schemes endorsed by the Law Society. 'Under current UK law, [claims managers] are not required to provide any consumer protection or carry insurance, and are not governed by any code of ethics or conduct,' she warned.