The chief Legal Ombudsman, Adam Sampson, said he had “significant powers of redress” to help protect members of the public. The announcement is part of a series of measures aimed at tackling rogue practice by CMCs.
Under MoJ proposals announced at the end of August, CMCs could be barred from making verbal contracts with clients, and would have to have written agreements with clients in place before charging fees. They would be banned from saying they are regulated by the MoJ, which Ministers say implies government endorsement. Instead, they would have to say they are regulated by the Regulation Unit.
The government has also proposed that CMCs be banned from advertising incentives, such as cash payments, to the public to tempt them to sign up. Kevin Rousell, the MoJ’s head of claims management regulation, said: “Time and time again we see examples of consumers who have inadvertently agreed to a contract with a CMC without a written contract in place. We want consumers to be better protected by making the terms of any contract clearer.”
The Regulation Unit is also investigating the issue of CMCs cold-calling potential customers and sending unsolicited texts, and has formed a working group with other regulatory agencies to pool resources and mount an enforcement campaign. Since 2007, when CMCs first became subject to regulation, the Regulation Unit has closed down more than 700 CMCs. In the last year alone, it closed 260.
Disgruntled clients of claims management companies (CMCs) will be able to bring their complaints to the Legal Ombudsman in future. The Ombudsman will take over complaints-handling responsibility from the Ministry of Justice’s (MoJ) Claims Management Regulation Unit next year. The move means clients will for the first time be able to seek monetary compensation.