The government appears to have rowed back from its commitment to consider banning claims management companies (CMCs) from making cold calls.
Work and pensions minister Lady Buscombe (Peta Buscombe) told the House of Lords this week that the government is minded to eschew a ban and instead strengthen regulation of CMCs by transferring responsibility to the Financial Conduct Authority. This would come through the Financial Guidance and Claims Bill announced in last month's Queen’s speech to tighten the regulation of CMCs and give regulators the power to cap fees.
During the bill's second reading on Wednesday, peers asked why the government had gone ‘silent’ on the issue of cold calling. Lord Sharkey (John Sharkey), a Liberal Democrat, said the omission was 'regrettable'.
Buscombe replied: 'We believe that strengthening the regulation of claims management services should reduce the number of nuisance calls made by CMCs, as they will have to comply with the FCA’s tougher regulatory rules on marketing and advertising.
'CMCs are already banned from introducing claims or details of potential claims to solicitors if these have been obtained through an unsolicited approach by telephone or in person.'
She explained that the Information Commissioner’s Office also enforces restrictions on unsolicited direct marketing calls, and the upcoming Data Protection Bill will include updated powers and sanctions for the commissioner.
Lady Altmann (Ros Altmann), Conservative, pointed out that her party's manifesto had promised to consider banning claims management companies from cold-calling members of the public.
'This is absolutely right, and the bill should clamp down on CMCs which operate unscrupulously and their unsolicited calls or texts - which so many noble Lords, such as me, regularly receive,' she said. 'Tougher regulation and capping fees can help, but banning nuisance cold calls that encourage people to make false claims is absolutely right.'
Speaking for Labour, Lord Stevenson of Balmacara (Robert Stevenson), said lords had already met the minister privately and called for the bill to be widened in scope to include a ban on cold calling and cold texting.
Personal injury solicitors have been vocal in calling for a ban on unsolicited communications, saying these have fuelled the perception of a compensation culture and encourage fraudulent claims to be made.