Duncan Lewis

Government to set up legal ombudsman to redress consumer complaints against claim firms

Date: (30 August 2012)    |    

Total Comments: (0)    |    Add Comments

With the government deciding to appoint a legal ombudsman to take over the responsibilities for complaints, consumers could receive up to £30,000 for poor services by claims management firms.
From 2013 the legal ombudsman would be responsible for complaints, which means consumers grievances of having had received inadequate services could be awarded compensation of up to £30,000.
Claims management companies pursue compensation on behalf of consumers, usually in return for a percentage of any eventual cash award. They have mushroomed in the wake of the payment protection insurance (PPI) mis-selling scandal, but also operate in areas such as personal injury, industrial injuries and even the mis-selling of solar panels.
Several of these management firms solicit business by sending emails and texts to customers usually on a no win no fee basis, but there have been instances where some companies had made false claims or have asked payments bluntly from consumers.
The current position when a consumer want to complain about a claims management firm is to go the claims management regulator which does not have the power to compensate consumers. Also the claims management firms are not authorised by the financial Services Authority.
In its 2011-12 annual report on claims management regulation, the Ministry of Justice (MoJ) said it had suspended, cancelled or warned 400 claims firms in the year to March 2012, and that 93% of the complaints it received over that period were concerning about financial services claims firms. It said the number operating in that sector had grown from 946 to 975.
The MoJ said the reforms coming from 2013 would enable its Claims Management Regulation Unit (CMRU) to redirect its resources to work with the claims management industry to improve standards and take wider action against claims management companies who consistently breach the rules.
The MoJ's head of claims management regulation, Kevin Rousell, said that this reform was a wining situation for consumers giving them another means to help stamp out malpractice in the industry.
The CMRU would keep targeting those claims management firms who do not comply and with the partnership of the legal ombudsman would eradicate those who take advantage of the consumers.
Chief legal ombudsman Adam Sampson said it was great news for the public and consumers as it had significant powers to redress their grievances and to help protect them.
In mid-August the MoJ announced it was cracking down on dodgy PPI claims firms, setting up a specialist unit to investigate mis-selling claims.