A new government proposal is taking aim at claims firms by levying large fines to firms that unabashedly make unsolicited texts and phone calls to the UK’s general public in attempts to find new customers.
The Treasury and the Ministry of Justice have formed a joint initiative, creating a new clause added to the Financial Services Banking Reform Bill unveiled last week. The clause has made the exploitation of information gathered through cold calls illegal, even if genuine claims are found.
The aim of the new government proposal is to lessen the huge volume of nuisance calls being made by firms each and every day, encouraging millions of Britons to file PPI mis-selling claims.
Under the new proposals, claims firms can still contact potential customers via advertising, but the advertising must meet the standards established by the Claims Management Regulator. Firms that provide poor quality and make misleading statements may also be subject to large fines.
According to the Ministry of Justice, its interventions have already substantially reduced the number of claims firms in operation. The MoJ also mentioned that unsubstantiated claims by those in search of compensation create added costs for other bank and business customers.
The enforcement staff of the Claims Management Regulation Unit of the MoJ will be increased in an effort to enforce the new regulations. Regulated claims firms will face added fees and misconduct fines in order to fund the additional employees.
Justice minister Shailesh Vara, stated, “We will not tolerate companies which waste hardworking people’s time and money through their own laziness, incompetence or frankly dubious practices. We are already making sure rogue companies are shut down – and now we are ensuring those who are wasting everyone’s time will pay for it.”
Sajid Javid, the financial secretary to the Treasury, echoed the justice minister’s statements by saying, “These new rules will put PPI claims pests in their place. Cold call companies that bother the public will now have one less reason to do so. This will also help free up the banks to pay legitimate claims more quickly.”
The government believes there are currently more than 1,100 claims firms specialising in helping people file mis-selling claims for a wide array of financial products.
Although the number of firms is reducing every day, banks have complained that some of these firms are sending them a barrage of incomplete and inaccurate claims, creating unnecessary costs and significant delays in the resolution of genuine claims. The government hopes this will change when the new regulations take effect in 2018.