The government has emphasised its intention to introduce a ban on cold-calling by adding it to the long title of the parliamentary bill that will bring the ban about.
The news comes as the bill – the Financial Guidance and Claims Bill – has been amended to cap at 20% the fees claims management companies (CMCs) and legal services providers can charge consumers for claims management services in relation to PPI claims.
Last month, the government executed a surprise u-turn by announcing its intention to ban cold-calling by CMCs, and in last week’s third reading of the bill in the House of Lords, minister Baroness Buscombe accepted an amendment to the bill’s long title laid by Liberal Democrat Lord Sharkey.
The long title of bill, which will also effect the transfer of CMC regulation from the Ministry of Justice to Financial Conduct Authority (FCA), has the additional words in brackets: “A bill to make provision establishing a new financial guidance body (including provision about cold-calling and a debt respite scheme); to make provision about the funding of debt advice in Scotland, Wales and Northern Ireland; and to make provision about the regulation of claims management services.”
The bill has now gone to the House of Commons for consideration. Baroness Buscombe told peers that the provisions on cold-calling would be added during the bill’s passage through the Commons.
On PPI, the government decided to legislate for a cap in advance of the FCA taking over responsibility for claims management regulation and to set this cap at 20% (excluding VAT) of the claim value.
The intention is that the cap will be introduced two months after the bill receives Royal Assent which, subject to Parliamentary approval, is expected to be by March 2018. This interim cap would remain in place until the FCA exercises its own fee-capping duty under clause 17 of the bill.
The fee cap will be enforced by the Claims Management Regulator in respect of CMCs and the legal service regulators in respect of law firms.
During the debate, Lord Hunt of Wirral, the former Conservative cabinet minister and a partner at leading insurance law firm DAC Beachcroft, said the FCA should “urgently consider extending the cap to other claims to address the drastic spike in claims related, for instance, to gastric sickness while on holiday”.
He added: “It is no coincidence that there has been this massive surge in claims, just as CMCs prepare for the deadline for bringing PPI claims and the introduction of measures to tackle the high number of whiplash claims.”
Baroness Buscombe replied: “Both we and the Financial Conduct Authority are aware that our plans for whiplash reform could have an impact on this market.
“I reassure him that the FCA will certainly keep this sector under review and will monitor developments closely during the implementation phase.”
Alongside the cap, the Claims Management Regulator is to introduce a series of further restrictions on what and how financial products CMCs can charge.
These include not charging fees prior to the conclusion of the claim, ensuring all charges are reasonable, and permitting the client to cancel a contract at any time. The new rules will come into effect on 1 April 2018.
Separately, Hassim Iqbal has been disqualified from acting as a director for seven years after his personal injury CMC, Check Point Claims Ltd, had its authorisation withdrawn by the Claims Management Regulator and it also failed to pay a £250,000 fine imposed by the Information Commissioner’s Office for sending out almost 6.4m automated cold-calls calls.
A further 11 million calls were made but not connected.
Check Point traded from July 2013 to February 2016 and generated leads for noise-induced hearing loss claims for law firms. It went into liquidation in March 2016.