If proposals by the government are pushed through, rogue claims management companies (CMCs) will face fines of up to 20% of their turnover.
The Ministry of Justice (MoJ) are hoping to gain the power to fine those companies who have obtained information through cold calling and spam texts – in a move which will see some offending CMCs out of pocket to the tune of £1million.
Justice Secretary, Chris Grayling underlined the government’s stance, as part of a consultation on how to penalise companies that breach the Claims Management Regulation Unit (CMRU) rules.
He said: “It is time to stop these claims companies from plaguing hardworking people’s lives and wasting everyone’s time – the scale of these fines shows just how serious we are about stopping them.
“The claims management regulator already takes tough action against companies which break the rules, suspending and closing down rogue firms, but now these fines will give us an extra weapon to drive bad behaviour out of the industry.”
The proposals come at a time when it has been revealed that, since the referral fee ban, the amount of nuisance calls had been reduced.
This consultation will also be followed up later in the year by another regarding lowering the threshold for when the Information Commissioner’s Office (ICO) can fine companies.
The ICO recently sent out a warning to solicitors regarding their use of unsolicited methods, after it was revealed that there had been a record number of complaints, linked to accident claims, during the last three months of 2013.
As things stand, calls made to potential claimants must cause ‘significant damage’ or ‘substantial distress’ in order to be deemed worthy of being penalised.
It is certainly a positive thing to see the government acting strongly against this method of gathering information and it is bound to help rid the profession of spurious and fraudulent claims in the long run.
1. The Guardian; http://www.theguardian.com/politics/2013/sep/05/chris-grayling-announces-legal-aid-reform-u-turn-politics-live-blog