The Legal Ombudsman (LeO) has recruited a team of 30 to deal with the thousands of complaints about claims management companies (CMCs) it will receive from today, it has emerged.
The transfer of complaints about poor service from the Claims Management Regulation Unit (CMRU) based at the Ministry of Justice (MoJ), marks the end of a long saga since the government’s first promise of action in August 2012.
The CMRU will continue to accept complaints about the “conduct and activity” of CMCs, as a new “conduct report” form posted on the MoJ website yesterday makes clear.
The CMRU has only just won the power which it long sought to impose fines on wayward companies.
The power, which went live on 29 December 2014 under the Financial Services (Banking Reform) Act, will give the unit the ability to impose fines of up to £100,000 on small CMCs and 20% of turnover on large ones.
LeO’s powers to order CMCs to pay compensation, will be limited to £50,000 – the existing limit for law firms and other legal services providers.
Kevin Rousell, head of the CMRU, said: “This is a win for consumers and provides another tool to help stamp out malpractice in the industry. We will work in partnership with the Legal Ombudsman to root out those CMCs that take advantage of consumers.”
Justice minister Lord Faulks commented: “People should not have their time wasted by the poor services of some claims firms. The new complaints service will make use of the Legal Ombudsman’s expertise and provide a new avenue for redress for those who have received poor service.”
A spokesman for LeO said the move would “free up” the CMRU to manage the industry and focus on “systemic” problems.
He said LeO had recruited around 30 new staff to handle CMC complaints and aimed to launch the new version of its website to coincide with the change.
Simon Tunnicliffe, head of CMCs at LeO, said new information on the website would help companies improve their complaints-handling procedures.
LeO has previously estimated the number of CMC complaints it will receive every year at 3,000, at a cost of £3.2m, but some have suggested the figure will be much higher.
CMCs will fund the new complaints service through a sliding scale of fees payable to the CMRU.
The CMRU handled around 10,500 “consumer contacts” in the last financial year, of which around 8,700 were classed as complaints.