209 bogus claims firms shut down

moneyGareth Fuller/PA Wire

Some 209 rogue claims management companies were shut down in six months as part of a major crackdown on firms which "rip-off" consumers, figures have revealed.

A further three firms were suspended and 140 have been warned for bad practice by the Claims Management Regulation Unit between April and November this year.
Companies shut down in the period include personal injury firms like Accident First Xchange in Greater Manchester, financial services businesses like First Refunds in West Sussex, and housing repair organisations like People's Legal Bureau in Hampshire.

The unit, which was set up in 2007 and is part of the Ministry of Justice (MoJ), penalises firms for bad service, misleading marketing and hidden charges.

Head of the unit Kevin Rousell said it was also working with data watchdog the Information Commissioner's Office to tackle firms who break the law with unsolicited calls and texts.

"We will continue to tackle bad practices by claims management companies and take action against those who break the rules," he said.

More than 900 claims management companies have been shut down in the past five years, the MoJ said.

The crackdown comes ahead of Government plans next year to give consumers more protection against rogue firms, including making all businesses agree written contracts with customers before taking fees. An independent consumer complaints service which can compensate those who have received a raw deal will also be set up.

Justice minister Helen Grant said: "We will not tolerate claims management companies that rip off consumers and flout the rules - 352 claims management companies shut down, suspended or warned for bad practice by the Claims Management Regulation Unit shows we mean business."

From next year the Legal Ombudsman will provide an independent complaints scheme for dissatisfied claims management customers.

© 2012 Press Association
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