This article first appeared in Modern Insurance Magazine Issue 29, March 2018
The long wait for a ban on cold calling may be coming to end. Against the wishes of the Government, a cross-party group of Peers successfully forced an amendment into the Financial Guidance and Claim Bill, currently making its way through Parliament, to universally ban cold-calling.
It is not as straightforward as that of course. The proposal pushed through by the well-meaning Peers would appear to have some major flaws. The Bill, as it currently stands, provides the Secretary of State with the power to introduce a ban on cold calling, but only if recommended by a single financial guidance body which is being established by the Bill. Nor would the Secretary of State have the power to actually enforce the ban. The Government has made the reasonable arguments that this will take time to implement – the body needs to be established, develop a report and recommendations, secondary legislation needed to implement. They also questioned whether this new financial guidance body was the appropriate oversight vehicle.
Government Ministers have said that they will return to the issue when the Bill goes through the House of Commons early in 2018. It looks likely that they will seek to replace the apparently flawed amendment from the Lords with their own legislative proposals to introduce a ban. In effect, they will tidy up the legislation.
MASS has long called for a ban on cold calling in the PI market by CMCs and others. We recognise, however, that whilst a ban might be one of most important single initiatives to deter fraudulent and other unwanted behaviour, it is only part of the solution. Fines, enhanced powers for the regulators and caps on the fees that CMCs can be charged will all help dissuade poor behaviour and reduce fraud. It will always be imperfect of course. Cold-calls may still originate from overseas, and some claims farmers may go underground in the UK, but by the time the Bill receives Royal Assent, significant progress will hopefully have finally been made in the fight against fraud.
It is little short of tragic that this positive step forward could be counteracted by a whiplash reform programme that will likely open the doors to a resurgent CMC market, resulting in a range of unwanted behaviours that could actively encourage fraud.