Claims management companies need better regulation?

A number of consumer campaigners have banned together to give Justice Secretary Ken Clarke a piece of their mind, calling for claims management companies to be regulated much more closely.

Criticism of claims management companies has been growing after it’s come to light that many are charging their consumers up to one third of their personal injury compensation payouts, even though it costs nothing to submit a claim to the Financial Ombudsman Service.  These firms are simply breaking the law, a letter sent to Mr Clarke claims, stating that there’s been a failure on the part of the Government to adapt its regulatory practices to the quickly-growing sector.

It’s not just whiplash claims and other car accident claims that CMCs ‘help’ consumers bring, as these claims management companies cover a wide range of grievances.  Urgent action is needed to curb the proliferation of CMC charges, the letter stated, since the lion’s share of compensation claims for mis-sold payment protection insurance policies will occur this year, and that steps need to be taken now to prevent CMCs in taking too large a slice of the pie.

The Ministry of Justice needs to take action to encourage tighter regulation and enforcement and better self-regulation and supervision of the industry, the letter says.  The authors added that the Government has a responsibility to to aid consumers by taking steps to make sure claims management firms are regulated properly and that best practice is used in order to do so – and if this requires new legislation to accomplish this goal, so be it.

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