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MOJ Clamp down on Claims Management Firms with help from SRA

On 12th September, we reported on an investigation by the Ministry of Justice in respect of alleged breaches of the Compensation      (Claims Management Services) Regultions 2006 and the Conduct of Authorised Persons Rules 9 (2013).

The MOJ has now published details of all of their investigations under these new 2013 rules. Further guidance published in October shows that the MOJ is working together with the SRA in this sector.

The MOJ have published details on their website of 7 concluded enforcement actions and 10 confintuing investigations. 

Enforcement Action.

In four cases, the investigation has resulted in 4 companies having their Authorisation cancelled. The breaches complained of included General Rule 5 ‘ A Business shall observe all laws and regulations relevant to it’s business’ and General Rule 8 ‘A Business shall operate a complaints scheme in accordance with Rules made by the Regulator’.

The subject firms also breached a number of ‘client specific’ rules including provision of documentation to clients, permitting clients to withdraw from contracts and ensuring that information provided to the clients is clear, transparent, fair and not misleading. 

In on case, conditions have been imposed on authorisation and in 2 further cases the investigation was concluded with the acceptance of Undertakings, where it is assumed that no admission as to misconduct have been made ( although this concession does not appear to have been mentioned on the website).

The effect of the undertakings is dealt with in paragraph 7 of the undertaking – ie 

I understand that if the Claims Management Regulator receives any evidence that Real Time Claims Ltd has failed to observe the terms of this undertaking, then further enforcement action will be taken to suspend, vary, or cancel the business’s authorisation. √جª¬ø

The company also has to agree to information being placed on the MOJ website, thereby allowing the Regulator to fulfil it’s respobsibility of informing clients as to regulatory steps that have been taken.

SRA Warning

The Solicitors Regulation Authority (SRA) have issued a warning note to practitioners who have referral arrangements for personal injury work, setting out types of arrangements which are likely to breach SRA conduct rules.

These include:

• agreeing with a CMC to deduct money from clients’  damages

 • inappropriate outsourcing of work to introducers

• referrals to other service providers which are not in the best interests of clients 

• lack of transparency about the arrangement.

The SRA go on to say, CMCs should note that CMR Client Specific Rule 8 requires you not to act in a way that puts a solicitor in breach of their rules. If you are found to be in breach of this rule, you may be liable to enforcement action.√جª¬ø 

The full warning has been published on the SRA website.  Click here to read the warning. 


Originally posted 2013-11-11 00:00:00.

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