The Government's Compensation Bill has set out its plans to regulate claim management companies, with a maximum of two years imprisonment for those working outside regulations. The Government believe that the bill will stop companies exploiting the public, making it an offence to provide claim services if they are not authorised.
At present, there is a voluntary code of self-regulation run by the Claims Standards Council, but it does not hold the necessary powers to hold people to account. Under the new bill, claim companies will have to comply with rules, and a code of practice laid down by the regulator, which will either be the Financial Services Authority or the Law Society.
This will ensure 'inappropriate or aggressive' advertising does not mislead consumers.
Our view
This is a good thing. Claims companies normally take a percentage of any compensation subject to a minimum.
Sometimes, this can far outweigh the actual compensation won. In addition, not all compensation claims are valid and the claims company makes money for things they should not.