The 2011/12 Claims Management Regulation Unit?s annual report shows that over 400 claims management companies have been cancelled, suspended or warned.

Regulatory action against claim management companies (CMCs) that failed to comply with industry standards has been stepped up over the last 12 months as the industry continues to develop. While most adhere to the rules, there are a number of CMCs being watched closely by the CMR Unit. The intention of regulation is not to stop CMCs trading but to try and ensure they operate their businesses responsibly, providing a fair deal for the customers they represent.

Justice Minister Jonathan Djanogly said:

'Last year the CMR Unit were able to investigate and take action against 409 poor practicing CMCs, of which 260 were shut down. This is a significant number and proves just how much work is going on to clamp down on CMCs that flout the rules and prey on consumers with over zealous business tactics.

'The key focus of the CMR Unit is to improve consumer protection by driving malpractice out of the claims management industry. We also want to see tougher rules enforced on CMCs and that?s why I am pleased to announce we are now introducing a complete ban on inducement advertising for this industry. No longer will CMCs be able to target consumers through advertisements which offer vulnerable individuals a cash incentive for signing up to use their services.'

Head of Claims Management Regulation Kevin Rousell said:
 
'The mass mis-selling of payment protection insurance (PPI) has seen a surge in the number of companies operating in the financial claims management sector. Poor practice is rife amongst some claims management companies who are falling over each other to get claimants? business.
 
'To help tackle this we have set up a specialist team to root out the poor practices used by some companies presenting claims for mis-sold PPI. Our team of investigators are using effective enforcement to stop bad practice and improve the industry once and for all.
 
'There is more to do and the industry will be subjected to radical changes over the next 12 months with tougher policing by all the relevant regulators.'

Read the Claims Management Regulation annual report 2011/2012