Scotland lags behind the rest of the UK in protecting consumers against claims management companies

The Claims Management Regulation Unit shut down 209 claims management companies (CMCs) in England and Wales between April and November in 2012. Three more rogue firms were suspended and a further 140 were warned. 

The unit, which is part of the Ministry of Justice (MoJ) for England and Wales, is also working with the UK's data watchdog to tackle firms who break the law with unsolicited calls and texts. The MoJ has now shut down over 900 CMCs over the last five years, meanwhile CMCs operating in Scotland remain wholly unregulated and free to rip-off Scottish consumers with impunity.

GLC's Principal Solicitor, Mike Dailly said: "Scotland is now seriously lagging behind the rest of the UK when it comes to protecting consumers from the rogue practices of claims management companies. CMCs have a licence to do as they please in Scotland, with no regulation, minimum standards or consumer friendly rights of redress. In short, CMCs can rip off Scottish customers without fear of any sanction. It is troubling indeed that the Justice Secretary in Scotland does not feel it important to give Scottish consumers the same quality of protection that exists in England and Wales".

CMCs frequently engage in high pressured cold-calling or texting, taking up-front fees from customers through credit and debit card payments over the phone. This year CMCs in England and Wales will be obliged to provide written contract in advance of taking fees, with the Legal Ombudsman being empowered to regulate complaints and award compensation where appropriate. 

Claims firm advertise widely on TV, newspapers and the internet and are not solely concerned with PPI (payment protection insurance claims), for example they encourage people to sue for personal injury compensation, and for other losses. Some firms also use improper cold-calling, by phone or text, to procure clients.

Scotland lags behind the rest of the UK in protecting consumers against claims management companies

Time to protect Scottish consumers against CMCs

Govan Law Centre welcomes news of additional consumer protection for customers of Claims Management Companies (CMCs) in England and Wales, but remains concerned that Scottish consumers continue to go without any legal protection in relation to CMCs providing services in Scotland.

The UK Government has announced that from next year people who are ripped off or receive a poor service from CMCs will be able to pursue a complaint to the Legal Ombudsman for England and Wales. The Ombudsman can award up to £30,000 in compensation in individual cases. CMCs are regulated by the Ministry of Justice (MoJ) under the Compensation Act 2006 for services provided in England and Wales, whereas in Scotland they remain unregulated, albiet the subject matter is devolved to the Scottish Parliament.

GLC's Principal Solicitor, Mike Dailly said, "Consumer protection is being strengthened south of border in relation to poor service by CMCs – and rightly so - while Scotland remains an oasis for CMCs to do as they please.  Our unregulated market means that the people of Scotland continue to have no redress or protection against CMCs. We call on the Scottish Government to close this major gap in Scots law sooner rather than later'.

Many CMCs are well known for malpractice and ripping consumers off; including not providing customers with contracts or paperwork, not allowing cancellation of their service or refusing to allow any refunds, misleading and exaggerating their success or service during sales calls, taking payments from customers’ bank accounts or cards without authorisation, and using third parties to engage in unsolicited marketing.

Time to protect Scottish consumers against CMCs

GLC warns UK consumers 'don't get ripped off when seeking PPI refunds'

The High Court in London has rejected the Brittish Bankers Association (BBA) judicial review which challenged the UK's financial regulator's power (Financial Services Authority, FSA) to require banks to review all of its Payment Protection Insurance (PPI) complaints (most of which the banks had rejected).

The challenge related to rules introduced by the FSA in August last year and whether breaches of FSA 'Principles' (high level general rules) can be a basis of redress for a customer who complains. The banks had unilaterally decided to place all complaints on hold pending their judicial review; the FSA had not issued a waiver to permit them to do this.

Campaigners have estimated that the High Court's decision could lead to three million customers receiving £4.5bn in refunds, consisting of premiums and interest. However, banks said they would continue to put claims on hold until they have decided whether to appeal against the decision, despite a call from the FSA to reconsider complaints immediately.

Govan Law Centre's Principal Solicitor, Mike Dailly, today warned consumers not to be ripped off by dodgy Claims Management Companies who promise to get you thousands of pounds back for an upfront fee of around £500 hundreds pounds or more.

Mike said: "Many people will be eligible for a refund but not everyone. You can check your eligiblity online using Money Saving Expert's free guide, which also has free style letters on how to complain and obtain a refund.  The key point is that you do not need to pay a Claims Management Company or anyone else to get a refund. You can do this yourself by writing a letter. There is no need to go to court. So if you've been ripped off with a useless PPI policy don't get ripped off again when it comes to seeking a refund".

PPI covers payments for loans and credit cards if the policyholder falls ill or loses their job, but the policies are riddled with loopholes, such as exempting claims from the self-employed or those with back injuries, the major cause of workplace illness in the UK.

GLC warns UK consumers 'don't get ripped off when seeking PPI refunds'