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Hundreds of claims management companies closed, says MoJ

31 December 2012

Claims management companies adopting illegal ways of soliciting business are being regularly shut down by the Government body monitoring their operations, according to the Ministry of Justice.

The Westminster Ministry's Claims Management Regulation Unit says it has shut down 209 such firms between April and November this year as part of an ongoing crackdown. Three other firms have been suspended and 140 warned as to their conduct.

Over the past five years the Unit has closed over 900 firms. However businesses are attracted by developments such as the scandal that broke this year over the mis-selling of payment protection insurance, which has led to the major banks setting aside millions of pounds to meet potential compensation claims. Individual members of the public may be unaware that they can reclaim their own losses without charge.

Many claims firms are tempted to attract claimants for these and other types of claim by illegal unsolicited phone calls and text messages. The unit is working with the Information Commissioner's Office, the data protection authority, to tackle such activities.

Some companies have also encouraged people to make fictitious claims.

Kevin Rousell, head of the Claims Management Regulation Unit, said: "We will continue to tackle bad practices by claims management companies and take action against those who break the rules."

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