MoJ score a century - 100 NOT OUT!
27th August 2009
The MoJ have recently announced that, since the introduction in April 2007, of regulation governing the working practices of claims management companies, some 100 of these organisations have lost their authorisation to provide services.
According to Kevin Rouseel, Head of Regulation at the MoJ, the reasons that companies had their certificates cancelled include fraud convictions, misleading marketing, failing to pay license fees and failure to provide the MoJ with required information.
Misleading marketing, with some companies targeting vulnerable groups (e.g. those heavily in debt) was seen to be a particular problem. Many debtors, pressured into paying substantial up-front fees were finding that, despite bold promises of ‘total write-offs’ they were still liable for full payment of their debts.
Claims management companies operating under MoJ license do have to follow a Code of Conduct. Under the code companies are banned from cold-calling, must disclose referral fees and allow consumers a two-week cooling-off period after contract signature. They must also provide claimants with information on all the options available to them, a realistic assessment of chance of success and costs of proceeding with the claim.
In early 2009 the SRA warned solicitors of potential disciplinary action if they bought consumer credit claims from claims managers. This followed high-level parliamentary concern’s that some companies were over-stating their ability to free consumers from credit card and loan agreements.