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CMCs face massive new fines for rule breaks

CMCs face massive new fines for rule breaks

Claims Management Companies (CMCs) face fines of up to 20% of their turnover according to new plans revealed by the Ministry of Justice (MoJ).

The fines will be implemented as part of the MoJs crackdown on CMCs cold calling or sending spam texts to potential clients. For rogue CMCs, this means that should they be caught offending, they could be punished with a seven figure penalty.

Offences that lead to CMCs being fined

This is the first time that fines have been linked to the income of a company. They come as the government look to enforce its stance on tackling fraud within the profession and the offences, listed as punishable, include:

  • Unsolicited Calls and texts
  • Spurious and unsubstantiated claims
  • Misleading marketing

The Justice Minister, Lord Faulks, feels that the rules will have a positive impact on the profession. He believes that, in the long term, it will help to clear up fraud and poor practice.

He said: “No longer should claims management companies be able to plague hardworking people and waste everyone’s time. The scale of these fines show just how serious we are about stopping them.”

“This is also good news for reputable firms in the industry, as it will boost confidence in the services provided by the sector.”

The new fining powers are the latest piece of legislation, introduced to clear up the claims industry. It follows the 2013 referral fee ban, LASPO and the inducement ban. They will apply from next year and the Claims Management Regulation Unit (CMRU) will police them.

It will be hoped that the trend of rogue CMCs leaving the industry will continue as a result. Over the last 16 months, the number of CMCs handling personal injury has dropped by 1,100. This suggests that the Government’s previous changes have been working as intended up to this point.

 

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