Ministry of Justice set to issue financial penalties to claims firms

In December 2014, the Ministry of Justice were granted the power to issue financial penalties to claims firms who display evidence of providing a bad service. Conor Houlihan looks at the implications of this change in regulation.

Jar tipped over spilling coins onto a judge's gavelOn 29th December 2014, the claims management regulation unit at the Ministry of Justice (MOJ) were granted the power to issue financial penalties to claims firms of up to 20 percent of their annual turnover.

Last year, the MOJ announced that they would be imposing fines on claims firms who are responsible for providing a bad service. Claims firms caught using information gathered by unsolicited calls and texts, or wasting people’s time and money by making false or unsubstantiated claims and using misleading marketing, are all at risk of being fined.

The government’s decision to introduce such penalties are a clear indication that they are looking to tackle the companies that are currently operating a bad service in the industry. Kevin Rousell, head of the MOJ’s unit responsible for carrying out the enforcement, said that not only is it important to reduce malpractice in order to protect consumers, it is also a way of improving the reputation of the firms who operate correctly and adhere to the rules.

Claims management firm EMC Advisory Services recently received a £70,000 fine for nuisance calls, after the commissioner received 630 complaints between 1st March 2013 and 28th February 2014.

EMC were handed a warning in 2013, but according to the MOJ, they continued to make “hundreds” of nuisance calls. The MOJ went on to state that they will be consistent with this approach, and the issuing of financial penalties will only occur once a financial institution continues to break rules despite previous warnings.

There is no limit to the amount the MOJ is allowed to fine a company caught consistently failing to adhere to the rules. The penalty that will be issued depends upon the nature of the offence and the turnover of the company involved.

– Conor Houlihan

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