Claims Management Company Fined for Regulatory Breaches

Claims management companies provide an essential service to wronged consumers, but the sensitivity of their public-facing role means that they are subject to a rigorous regulatory regime. In a case on point, one such company that failed to match up to the rules was hit hard in the pocket.

After receiving more than 100 complaints from members of the public who claimed to have been cold-called by the company’s agents, the Claims Management Regulator (CMR) commenced an investigation. The company was found to have made nine calls to persons who had opted out of receiving such calls under the telephone preference service (TPS) scheme.

The company was also found to have failed to conduct due diligence and to keep appropriate records in respect of personal data it had bought in from third parties. The CMR imposed a £198,000 fine, based on 4 per cent of the company’s turnover. The company, however, appealed to the First-tier Tribunal (FTT) against certain of the CMR’s findings and the amount of the fine.

In ruling on the matter, the FTT noted that the company accepted that the nine calls had been made without consent and in breach of the TPS scheme. In what was a systemic failure, it had relied on warranties given by those from whom it bought data without undertaking independent due diligence checks. There were, however, mitigating factors and it was not the most serious case of its kind. The FTT ruled that the fine had been pitched too high, reducing it to £99,072.

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