Enforcement action over referral fee ban slows down
Industry News : 5 March 2014
Claims Management Companies (CMCs) are currently being monitored by The Ministry of Justice over potential breaches of the referral fee ban, but enforcement action is slowly abating.
The MoJ revealed, in response to a freedom of information request, that 277 companies are subject to ‘ongoing further reviews’ in relation to non-compliance allegations.
The referral fee ban has seen regulators visit 862 CMCs since its introduction last April. Warnings have already been issued to 50 businesses for conduct rule breaches and 28 have surrendered their authorisation.
In total, the MoJ has received 77 complaints related to alleged breaches of the ban, a fraction of the 10,225 received in 2013. Last month, the MoJ revealed its crackdown on CMCs as it was stated that 200 licences were removed in 2013.
Justice Minister Shailesh Vara stated that ‘rigorous new measures’ to ‘rein in the rogue firms operating in this sector’ were being implemented across the board. However, the FoI response indicates that enforcement action has decreased in recent years, with last year’s number of licence revocations being the lowest since 2009.
Numerous other claims companies have closed down of their own volition: 2,259 CMCs were operating at the end of 2013 compared with 2,972 the previous year.
