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Referral fee ban drastically drops the number of claims management companies

Referral fee ban causes CMC to drop 23% in 6 months

Claims management companies (CMCs), most notably operating within the personal injury industry, have dropped by almost a quarter since the introduction of the referral fee ban according to new figures released by the Claims Management Regulator (CMR).

This news comes as no surprise but is welcomed as it would seem that the ban has rid the industry of many of the CMCs who were operating dishonestly. It can be revealed that operating of CMCs dropped by 23% from April to September 2013.

The report stated: “We anticipate that the personal injury claims market will continue to contract in 2013 and beyond as CMCs who are unable to adapt their business model to comply with the referral fee ban, exit the market. The financial products and services sector remains steady, although the PPI (Payment Protection Insurance) claims market has started to show signs of contraction.”

It was also revealed that since the referral fee ban was introduced the CMR had attended 700 CMCs, requesting 372 of them to produce information on their business structures to ensure there were no compliance issued and over 400 CMCs surrendered their authorisation.

Next up on the CMR’s agenda is the thorny issue of tackling unsolicited phone calls, texts and cold calling which have seen a rise in complaints in recent times. It is thought the requirements for CMCs will be tightened in a bid to rid the industry of such practices.

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