At the end of 2013 the Ministry of Justice ("MoJ") confirmed that it was initiating a "crack down" on claims management companies. The MoJ has always "regulated" Claims Management Companies ("CMCs").
The MoJ’s "crack down" includes allowing the Legal Ombudsman Service to hear complaints about CMCs.
CMCs are a relatively new breed of business in England and Wales. They are simply companies who seek out clients, administer their cases, potentially send letters of complaint and sell their cases to solicitors if the case requires litigation. For instance,
in Payment Protection Insurance claims a CMC will send the Bank a letter of complaint regarding the sale of PPI and then make a complaint to the Financial Ombudsman Service if that complaint is not successful. If the case requires litigation and/or if the
Financial Ombudsman Service finds against the customer the CMC will sell that case to a solicitor. The same happens for personal injury.
The text messages you receive about accidents, PPI and pension reviews all come from CMCs.
CMCs are under increasing pressure because the Government banned solicitors from paying a CMC a fee for referring a case to them.
Until now, CMCs have only been governed by the MoJ. The problem has arisen that the MoJ has no way of properly adjudicating complaints regarding CMCs. The decision that the Ombudsman will now deal with such complaints is welcome.
Berg has always advised clients of the dangers of a CMC. Companies may be set up that make it appear that they have the ability to run a complex legal claim, they cannot. Berg has seen letters of claim drafted by CMCs and sent to Banks in Interest Rate Hedging
Product complaints. None have been suitable. Only a solicitor will be able to offer a client the ability to draft a comprehensive complaint that encompasses legal claims and regulatory complaints. Berg has managed to settle a number of IRHP cases through
the FCA led review process without the need for fact find meetings based solely upon our letter to the Bank, thus proving that our letters are comprehensive and are taken seriously by Banks for the purposes of the FCA led reveiw into the sale of hedging products.
If you wish to discuss your case with an experienced member of our Banking Litigation team please call 0161 829 2599. If your case involves RBS’s use of GRG or a bank devaluing your business, please ask to speak to a member of the GRG team.