The government has today set out a long-expected plan to give the Legal Ombudsman responsibility for handling complaints about claims management companies.
The move, originally planned for last April, will now take place towards the end of next year, the Ministry of Justice announced today.
At present complaints about CMCs are handled by the ministry’s Claims Management Regulation Unit. The transfer will enable the unit to dedicate more resources to tackling bad practice in the sector, the MoJ said.
Other measures to toughen up regulation of CMCs include giving the unit new powers to fine companies which use information gathered by unsolicited calls and texts, or who provide poor-quality services.
The transfer will be effected through the Financial Services (Banking Reform) Bill, which had its third reading in the lords yesterday. The bill is expected to receive royal assent early next year and the change will take place later in 2014.
Justice minister Shailesh Vara said: ‘Consumers should be in no doubt that the bad companies out there are being dealt with. We have already ended the licences of more than 1,000 [CMCs] and tough new powers are now being brought in across the board.
‘This latest change will make sure people who get a bad service can get redress.’
Chief legal ombudsman Adam Sampson (pictured) said: ‘This announcement is great news for consumers who will soon have access to redress where they have experienced poor service from claims management companies. It is also good news for claims management since it will boost confidence in the services provided by the sector. The Legal Ombudsman will be ready to start accepting complaints as soon as legislation allows.’
Other rule changes will oblige CMCs to carry out thorough audits of how their data has been gathered, ‘so they can no longer turn a blind eye to whether leads have been found by illegal marketing texts and calls’.
They will also have a duty to make sure the claims they are submitting have a realistic chance of success, as well as ensuring full evidence is provided to back up any allegations, the MoJ said.