The Claims Management Regulator has handed out its biggest fine to date – £567,423 – and raided the offices of three other claims management companies (CMCs) as it tries to crack down on bad practices in the sector.
The fine went to Rock Law Ltd, based in Swansea, for coercing clients into signing contracts to make PPI claims, without giving them enough time to understand the terms and conditions before taking unauthorised payments.
Under rules introduced in December 2014, the regulator can fine CMCs of up to 20% of their annual turnover, as well as having suspending or removing their trading licences.
Rock Law’s licence has been made subject to three conditions: it must not enter into a legally binding contract with, or take payment details from, clients within 24 hours of the initial sales call, and the provision of pre-contract information to a client; it must record all calls with clients and prospective clients; and all call recordings must be retained for a minimum of six months
Head of claims management regulation Kevin Rousell said: “I hope firms that persist with poor practice take notice – if you break the rules you will have to pay.”
Issuing details of its latest enforcement activity, the regulator said that in the past two months it has used its powers to execute three search warrants at businesses in Nottingham, Bolton and Bury that were suspected of operating without a licence, which is a criminal offence.
“On each occasion the police were in attendance and assisted compliance officers with the execution of the warrants,” it said.
In other cases outlined by the regulator, a businessman who defrauded 1,500 consumers of over £170,000 through an unauthorised PPI claims business has been jailed for four years following a prosecution by Rhondda Cynon Taf trading standards. The charges – operating without authorisation and making fraudulent claims to secure customers – followed an investigation which was assisted by the claims management regulation unit.
Meanwhile, an unlicensed business that sold personal injury leads to authorised CMCs was convicted at Stafford Magistrates Court and fined £3,750, which was reduced to £2,500 for a guilty plea together with costs of approximately £1,900.
The regulator also highlighted the dangers of providing it with incorrect information, which is also an offence.
It outlined the case of John Christopher Smith, the director of Swift Accident Solutions, who also with nine others, was found guilty at Manchester Crown Court of masterminding a £1m-plus ‘cash for crash’ fraud and convicted for their role in the scam involving more than 200 false whiplash claims.
Among other counts of fraud, Mr Smith was convicted of making a false representation by failing to declare outstanding county court judgments when he applied for a licence to operate a CMC.