The Ministry of Justice is monitoring hundreds of claims management companies (CMCs) over possible breaches of the referral fee ban, but enforcement action is slowly abating.
In response to a freedom of information request, the MoJ – which regulates CMCs – said 277 companies are subject to ‘ongoing further reviews’ in relation to non-compliance.
The ban on paying or receiving fees for personal injury cases came into force last April, since when regulators have visited 862 CMCs. Warnings have already been issued to 50 businesses for conduct rule breaches and 28 have surrendered their authorisation.
In total the regulator has received 77 complaints directly related to alleged breaches of the ban, a fraction of the 10,225 received in 2013.
The MoJ hailed its own ‘crackdown’ on CMCs last month as it stated that 200 licences were removed in 2013.
Justice minister Shailesh Vara said that ‘rigorous new measures’ were being implemented across the board to ‘rein in the rogue firms operating in this sector’.
But the FoI response shows that enforcement action has slowed in recent years, with last year’s number of licence revocations the smallest since 2009.
Compared with the peak in 2011, when 298 businesses were stripped of their authorisation, revocations in 2013 were down by almost a third.
Many more claims companies appear to have closed down of their own volition: 2,259 CMCs were operating at the end of 2013 compared with 2,972 the previous year.
The MoJ also revealed it has seven staff members at the claims management regulation unit whose duties include policing the referral fee ban.