Misleading claims that debt can be written off as unenforceable, high pressure selling and cold calling in person will not be tolerated – tough message from Claims Management Regulator, Ministry of Justice (MoJ) as 100th company cancelled.

Companies’ authorisations have been cancelled for failure to comply with the claims regulation conduct rules, including ignoring requests for information from the regulator, criminal convictions for fraud, persistently misleading marketing and non-payment of regulation fees.

Head of Regulation at the Ministry of Justice, Kevin Rousell, said:

‘The majority of claims management companies registered with the Ministry of Justice are operating within the rules.

However, some companies choose to flout those rules and some also target consumers who find themselves in debt. People desperate for a way out of their financial troubles can be vulnerable to the misleading marketing that the Ministry of Justice Claims Management Regulator is continuing to tackle.

People may have paid large up-front fees for a service that doesn’t live up to the marketing hype, and in the case of debt-related claims find themselves still liable to pay all their debts in full. There has also been a trend towards high pressure cold calling from call centres, including making unsubstantiated claims and encouraging people into handing over fees there and then – a decision they regret later.

‘It is important that consumers make fully informed choices about whether to make a claim and whether to use the services of the company that has approached them. Consumers must be given clear information about the options available for pursuing their claim, realistic chances of success and the costs of doing so.

‘One hundred companies cancelled so far sends a strong message that if consumers aren’t treated fairly, there will be consequences for the companies. We will be continuing to step up the strong action needed to deal with those claims management companies found be disregarding the rules and the interests of the public.’

Examples of mis-leading claims that you can report to the regulator:

‘Credit cards written off within six weeks!’

‘80% of credit agreements are unenforceable.’

‘We can write off all your outstanding debt.’

Debtwizard’s top tips:

Do not part with any money until you have in writing exactly what the firm is offering through its service such as the full true cost and the time they say it should take.

Do not rush any decisions, think about it and say you will get back to them if you are interested.

Explore all your options.

Check to see if the firm that has offered a claims management service is regulated, check claims management licence here.

If they provide a debt service then they also need to have a current consumer credit licence which is issued by the Office of Fair Trading, OFT, check consumer credit licence here

Report any firms that give you concern to the Ministry of Justice on their anonymous hotline 0333 200 0110.

If you have debt problems that are getting out of control then see our link of the firms that can help you here at debtwizard guide to firms that can help

We have a very interesting and relevant article on 'unenforceable credit and loan agreements' which explains more on how 'claim management firms' work, see our debtwizard guide to unenforceable credit and loan agreements. 

Notes:

The Ministry of Justice (MoJ) is the Claims Management Regulator in England and Wales.

The MoJ checks a wide range of information about businesses before authorising them, monitors the services the business provides, will take action against businesses that breach the rules, which could include suspension or cancellation of authorisation.

Authorised businesses have to follow strict conduct rules.

• they must not ‘cold-call’ in person, or engage in any form of high-pressure selling
• they must give written information on how to pursue a claim and the costs involved before a contract is agreed
• they must allow a ‘cooling off’ period of at least 14 days after signing a contract in case the consumer changes their mind
• they must operate a customer complaints scheme that meets relevant criteria.

The 100 companies cancelled since April 2007 include claims management companies in the following areas: personal injury,  financial products and services.

More information www.justice.gov.uk/