CMCs to be fined under new power?
Industry News : 1 April 2014
Claims management companies could soon be fined up to 20% of their turnover under new powers for obtaining information through cold calling and spam texts.
The Ministry of Justice revealed that the new fining power could lead to some companies being fined millions of pounds if data protection laws are breached.
Current powers suspend or cancel authorisation of a CMC when in breach. However, regulators want the power to impose a financial penalty as an alternative. This is partly to protect clients of the firms from their CMC closing and to prevent rogue companies from resurfacing as a different entity.
Chris Grayling, Justice secretary said; ‘It is time to stop these claims companies from plaguing hardworking people’s lives and wasting everyone’s time – the scale of these fines shows just how serious we are about stopping them.
‘The claims management regulator already takes tough action against companies which break the rules, suspending and closing down rogue firms, but now these fines will give us an extra weapon to drive bad behaviour out of the industry.’
Later this year, a consultation will be started on lowering the threshold for when the Information Commissioner’s Office can fine companies. At present, calls must cause ‘significant damage’ or ‘substantial distress’ to attract monetary penalties.
Regulations will be laid in parliament next week to simplify how the telecoms regulator, Ofcom, can share information with the ICO and insolvency services about rogue companies.
By law, unsolicited live direct marketing calls cannot be made to a number that is registered with the Telephone Preference Service unless the person has agreed to receive calls by that company. All automated recorded marketing message calls require prior consent.
The ICO warned solicitors earlier this month to check where cases had originated, to ensure they were not the product of cold calling or spam texts.
It reported that a record number of complaints have been made linked to accident claims – with 1,645 complaints being received during the last three months of 2013.