DCA To Regulate Claims Management Services

by Robin Pilgrim, LawAndTax-News.com, London

24 April 2007

The Department for Constitutional Affairs on Monday assumed responsibility for regulating claims management services in the UK.

The Compensation Act 2006 received Royal Assent on 25 July 2006. Part 2 of the Act establishes a statutory framework for the regulation of claims management services. It is prohibited to provide the regulated services unless authorised or exempt.

The DCA has powers under the Act to take action against persons suspected of providing regulated services without authorisation (if found guilty, the maximum penalty is 2 years imprisonment, or a fine, or both), and against authorised persons suspected of breaching the rules or unprofessional conduct.

According to the DCA, the move aims to:

• Reduce malpractice including high pressure selling;
• Stop unauthorised marketing activity in hospitals;
• Reduce misleading advertising;
• Deliver clearer and more transparent contracts; and
• Ensure that authorised persons have a clear mechanism for dealing with consumer complaints.

A baseline study has also been published this week, which provides an analysis of the sectors being regulated and outlines the strategy for dealing with malpractice.

Legal Services Minister Bridget Prentice announced that:

"I am delighted to announce today the full commencement of claims management regulation. Appropriate action will be taken against those who wilfully flout the law."

She continued:

"The strict rules with which authorised persons must comply will help raise consumer confidence. The regulation has put in place vital safeguards for consumers when using the services of claims management companies and I am confident that it will also help raise standards across the industry."

"The regulation has been delivered in record time and I am grateful for the widespread support that has made this possible. I hope we can continue to work together to make regulation more effective."

Around 800 organisations have so far been authorised, and the authorisation process is continuing for applications received after the initial deadline of 16 February.

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