An opportunity to make a difference

This article first appeared in Modern Claims Magazine, Issue 16, November 2015

An opportunity to make a difference

An opportunity to make a difference

The issue of claims management companies (CMCs) and nuisance calls and texts has never been off the agenda, but it has dramatically risen up the rankings of hot topics in recent months. The House of Commons even debated the problem of nuisance calls again recently. It is, however, the appointment of Carol Brady, a board member of the regulator, to conduct a full review into the regulation of CMCs that has been concentrating minds recently. It will hopefully provide an opportunity for a full and careful analysis of the issues, challenges and problems.

There are still around 1000 authorized specialist CMCs operating in the claims market out of over 1,700 firms. This is, however, the lowest number of firms in the sector since regulation began in 2007 (there were over 1900 in 2013). They had a combined turnover of £310 million in 2014/15 – only second to financial products and services – an increase of 27% from 2013/14. Authorized and fully regulated CMCs are obviously perfectly entitled to conduct their business and clearly have a role to play in the sector.

What is the scale of the problem though? An Ofcom study in 2013 suggested that only 2% of all nuisance calls were for accident claims, way behind the 22% for PPI claims, 10% for energy, 10% for market research and 8% for general insurance. This doesn’t appear to fit with common perceptions. Most of us seem to receive numerous calls about personal injury claims, sometimes asking about a specific accident we have actually had, others where they appear to be simply fishing to find people who have had an accident.

The vast majority of these calls are likely to come from unauthorized CMCs that appear to regenerate shortly after being shut down with alarming alacrity, telesales companies and CMCs originating offshore that escape any kind of regulation.

The review clearly has a lot of ground to cover in a relatively short period of time before it must prepare its report. There is the thorny issue of the regulatory structure itself. And there are the complex issues of enforcing existing data protection legislation and reviewing data privacy issues, which go way beyond CMCs and the claims sector. The review has a real opportunity to make a difference and we wish it well in its deliberations.

Susan Brown, author of ‘An opportunity to make a difference’, is Chair of the Motor Accident Solicitors Society (MASS) and a Director of Prolegal


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