Over 200 rip-off claims management firms shut down

Simon Ward
by Lovemoney Staff Simon Ward on 02 January 2013  |  Comments 2 comments

The Ministry of Justice has published figures on the number of rogue claims management firms it closed over an eight-month period last year.

Over 200 rip-off claims management firms shut down

Over 200 claims management companies were shut down between April and November 2012, the Ministry of Justice has reported.

The ministry’s Claims Management Regulation Unit shut down 209 companies and removed their licences due to bad practice. Three companies were suspended and 140 were warned about their future conduct.

The unit monitors firms for rip-off practices including bad service, misleading marketing and hidden charges.

The companies that were shut down included personal injury firms and payment protection insurance claims companies.

The Government is planning to introduce new measures this year that it hopes will help protect us from rogue companies. These include making all businesses agree written contracts before taking fees and launching an independent complaints service via the Legal Ombudsman that can offer compensation to victims of rip-offs.

The Claims Management Regulation Unit says it has shut down more than 900 claims management companies over the past five years.

One of the biggest causes for complaint over the past year has been the sending of unsolicited texts and emails.

In November, the Information Commissioner’s Office (ICO) fined the owners of Tetrus Telecoms a total of £440,000 for sending out unsolicited text messages. The details of people who responded were then sold on to claims management companies.

If you’ve received an unsolicited text message or phone call, you can report it to the ICO via its website.

More on scams and rip-offs

How to stop junk mail and unwanted telephone calls

ALLOW: new ways to protect your privacy and information online

Cheque fraud rising: how to protect yourself

Worst email scams of 2012

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Comments (2)

  • prudy53
    Love rating 1
    prudy53 said

    The PPI industry really set about scamming people! First, because claiming for PPI was new to a lot of people. They either had to put up with unsolicited texts or calls or they would come upon claims firms in busy shopping centres soliciting clients, and it never dawned on them that those claims companies were about to charge them 25% of the takings, and on top of that, they would have to pay another 5% for tax, making it 30% of the total amount. You would think that their conscience would have allowed them to pay the tax from the 25%. Second, when they showed the volumne of paperwork, time was factored in and with people having busy lives they feltl that they might not have claimed at all, since they never knew about it in the first place.

    The shock came in when the firms sent the paperwork with all the legal jargon and the subtle threat that they are contracted to them and to default in paying over their portion could land them before a judge. When the clients saw how much their 30% came out to be, they couldn't believe that the PPI companies did so little to gain so much. Britain has realised that something has gone horribly wrong.

    Report on 02 January 2013  |  Love thisLove  1 love
  • fenemore
    Love rating 251
    fenemore said

    It is all very well quoting the number of PPI Claim Management companies that have been shut down, but it does beg the question "How the hell did they get licenses in the first place?".

    Surely the licensing authority's system needs tightening, or are they just happy to authorise any company as long as the get their fee?

    Report on 05 January 2013  |  Love thisLove  0 loves

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