CMC complaints to be handled by Legal Ombudsman

Published: 06/09/2012

The Ministry of Justice (MoJ) has confirmed it will hand responsibility for complaints about claims management companies (CMCs) to the Legal Ombudsman.

The move, which sees the ministry’s Claims Management Regulation Unit revoked of the duty to allow for it ‘to refocus its resources on working with the claims management industry to improve standards and take wider action against CMCs who consistently breach the rules’, will mean any CMC that provides an inadequate level of service to its clients could be made to pay compensation.

Kevin Rousell is the Head of Claims Management Regulation:

“This reform is a win for consumers and provides yet another tool to help stamp out malpractice in the industry. Our Claims Management Regulation Unit will continue to target those CMCs who do not comply and we will work in partnership with the Legal Ombudsman to root out those CMCs who take advantage of customers.”

Desmond Hudson, Chief Executive of the Law Society, supports the move but is conscious about the task in hand:

“We welcome the government’s consultation. However, we remain concerned that the Claims Management Regulator has an uphill task in regulating people who are at the fringes of respectability. We regard it as instructive that the regulator is consulting on the wisdom of allowing these organisations to refer to the fact of their being regulated by the MoJ, which suggests that the MoJ has doubts about its own regulatory regime.

“The fact that over 8% of claims managers had their licenses removed in 2011/12 and over 17% left the market suggest an industry in turmoil with too many companies bringing the legal process into disrepute by encouraging weak claims.

“In our view, the government needs to take a much more robust attitude to these organisations. The alternative business structure regime provides an opportunity for legitimate firms to be regulated consistently with solicitors and other legal services providers, while the referral fee ban will significantly affect these activities. It is hard to see why there should be a place for the remainder.”

The Legal Ombudsman will take charge in April next year.

Content correct at time of publication