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CMC Rule Consultation

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  • CMC Rule Consultation

    This thread is devoted to Beagles' response to the proposed rules changes for claims management companies in a consultation paper issued by the Claims Management Regulator at the Ministry of Justice (MOJ).

    Legal Beagles have a good working relationship with MOJ and as such we are confident that our response will be taken seriously and all your suggestions are welcome.

    The consultation document includes some important proposed changes to the way CMCs are allowed to opperate, not least a requirement that up front fees cannot be taken until the customer has signed a written contract.

    Although the format of the consultation paper it is a little complicated, for our purposes it is basically in 4 parts:

    1) Proposed Main Amendments to the Client Specific Rules
    2) Proposed Additional ‘Technical’ Amendments to the General Rules and Client Specific Rules
    3) Other Regulatory issues
    4) Questionnaire


    Link to consultation document https://consult.justice.gov.uk/digital-communications/cmr-rules-consultation-cp15-2012

    Initially I suggest we deal with the first part which comprises 3 important rules changes which propose to ban CMCs from using the fact that they are regulated by the MOJ as a selling point, a ban on taking up front fees during a phone call and a requirement to keep customers updated on their claims.

    I have written an initial draft response below. As copying and pasting the full details of the proposed changes is difficult to do, please reference them in the consultation doc by the page numbers quoted.


    Proposed Main Amendments to the Client Specific Rules


    i. What CMCs are able to say about regulation by the MoJ (page 12)

    We agree with the proposed amendment to the rule in its written form in pre-contractual information. We also agree with the suggestion that that the rule should be extended to marketing calls as it could be inferred that the Claims Management Regulator is in some way condoning or authorising the unsolicited call.

    The CMR knows full well that unsolicited calls from PPI claims companies have become a bain of modern day life and for many people a relentless and tiresome distraction to their day or evening. In allowing CMCs to somehow endorse their sales call with mention of the Regulator, the CMR would be complicit in the unsolicited call process.


    ii. The provision of pre-contractual information and contractual agreements with clients (page 14)

    Although we agree with the proposed amendment to the wording of client specific rule 11, it should also make clear that the 14 day cooling off period begins at the point that the customer actually signs the contract and not, for example, when the customer first received the pre contractual information or the contract for consideration. In it’s present form it remains ambiguous.

    Therefore we would suggest an additional sentence to the proposed wording that reads ‘’The 14 day cooling off period will commence on the that date the contract is signed’’.

    iii. Requirement to keep clients updated as to the progress of their claims and any change to costs (page 18)

    We are genuinely at a loss to understand why the proposed amendment to client specific rule 18 only applies to instances where a CMC has had their authorization varied or suspended. One of the most common complaints we receive is from consumers who have handed their claim to a CMC but have not received any updates whatsoever on the progress of their claim, regardless of whether an upfront fee has been paid, for many months and sometimes years and despite chasing the CMC for one. Many CMCs will simply not bother to provide any progress update at all until their claim has succeeded.

    The consultation paper acknowledges that ‘’ Keeping a client informed and providing details of the progress of their case should be a fundamental part of the overall quality of service offered by a CMC. It is also a condition of authorisation that CMCs ensure any service offered meets the needs of the client’’ yet, inexplicably, the proposed amendment would seemingly allow a CMC not to have to provide any update at all except in the event it has had it’s authorization varied or suspended.

    We propose that the rule should require CMCs to provide an initial update within 3 months of the signing of a contract. This is based on the fact that as the FSA's 2 stage complaints system has now been abolished, PPI providers must give a final response to any complaint within 8 weeks. The final response is critical to any claim and it is something the customer must be made aware of. Therefore a requirement to update the customer within the first 3 months of the start of the claim will encompass the crucial outcome of the final response.
    Tags: None

  • #2
    Re: CMC Rule Consultation

    Well this doesn't bode well.

    It appears that the primary concern of the guy who's running the consultation is the cost to the industry of the rule changes, rather than the merits of increased consumer protection. He obviously didn't know who we were and as such it's concerning that that is his defualt position.

    I was very tempted to read him the riot act but decided to leave it to our consultation response.


    Hi Ashley

    We are currently working on our response to the CMR consultation but we're unsure as to the format in which it should take.

    Do we respond by reference to each proposed rule change (as numbered in Roman numerals) or by reference to the questionaire, or both?

    We'd be grateful for your guidance.

    Regards

    EXC
    Legal Beagles
    http://www.legalbeagles.info/


    Hi Nick,

    The easiest way to respond is in the form of a simple letter, responding to each question from the questionnaire (pages 35-38 of the consultation document) as appropriate.

    It is up to you how many of the questions you wish to respond to, there are quite a few questions, some of which touch on similar issues so you are under no obligation to answer them all. We would however welcome any contributions you wish to make, particularly in relation to any potential financial implications for businesses overall.

    I hope this helps, please do let me know if you have any further queries.

    Regards,

    Mr Ashley Palmer
    Policy & Regulation Manager
    Claims Management Regulation | Corporate Performance Group
    Ministry Of Justice | 4.15 - Zone B | 102 Petty France | London | SW1H 9AJ


    Ashley

    Many thanks - will do.

    I doubt we'll be making any contribution to the question of the financial implications for business. Our concern lays with the financial implications for consumers.

    Kind regards

    EXC
    Legal Beagles
    http://www.legalbeagles.info/

    Comment


    • #3
      Re: CMC Rule Consultation

      Hmmm I agree, that does not look promising. Ame & me are going to take a look at this consulktation properly today Nick x
      "Although scalar fields are Lorentz scalars, they may transform nontrivially under other symmetries, such as flavour or isospin. For example, the pion is invariant under the restricted Lorentz group, but is an isospin triplet (meaning it transforms like a three component vector under the SU(2) isospin symmetry). Furthermore, it picks up a negative phase under parity inversion, so it transforms nontrivially under the full Lorentz group; such particles are called pseudoscalar rather than scalar. Most mesons are pseudoscalar particles." (finally explained to a captivated Celestine by Professor Brian Cox on Wednesday 27th June 2012 )

      I am proud to have co-founded LegalBeagles in 2007

      If we have helped you we'd appreciate it if you can leave a review on our Trust Pilot page

      If you wish to book an appointment with me to discuss your credit agreement, please email kate@legalbeaglesgroup. com

      Comment


      • #4
        Re: CMC Rule Consultation

        Originally posted by Celestine View Post
        Hmmm I agree, that does not look promising. Ame & me are going to take a look at this consulktation properly today Nick x
        Well I've re-formatted and drafted the completed response albeit in brief. Feel free to add or amend anything. I'm not sure if I've gone in too heavy but when they ask truly ridiculous questions like ''Do you have any comments or views regarding the current rules in relation to cold-calling?'' it's tough not to lose your rag.




        1) Do you have any comments on the proposals to amend the Client Specific Rules?

        Yes – see below.

        2) In relation to Client Specific Rule 6 (d), should the proposed amendment go further and prohibit CMCs from stating, during any marketing calls, that they are regulated unless specifically asked by a prospective client?

        We agree with the proposed amendment to the rule in its written form in pre-contractual information. We also agree with the suggestion that that the rule should be extended to marketing calls as it could be inferred that the Claims Management Regulator is in some way condoning or authorising the unsolicited call.

        The CMR knows full well that unsolicited calls from PPI claims companies have become a bain of modern day life and for many people a relentless and tiresome distraction to their day or evening. In allowing CMCs to somehow endorse their sales call with mention of the Regulator, the CMR would be complicit in the unsolicited call process.

        3) In relation to Client Specific Rule 11, should CMCs be required, as a condition of authorisation, to publish details of their terms & conditions, fees and anyother charges online and as standard?

        Yes this is an absolute must in the 21st century.

        Although we agree with the proposed amendment to the wording of client specific rule 11, it should also make clear that the 14 day cooling off period begins at the point that the customer actually signs the contract and not, for example, when the customer first receives the pre contractual information or the contract for consideration. In its present form it remains ambiguous.


        Therefore we would suggest an additional sentence to the proposed wording that reads ‘’The 14 daycooling off period will commence on the date the contract is signed’’.


        4) In relation to Client Specific Rule 11, do you have any alternative proposals that could address the issues regarding fees charged by some CMCs? For example, could a ban on CMCs levying fees on anything other than a ‘cash in hand’ compensation award paid to a consumer be effective? (This would mean that a CMC could not charge a consumer a fee if the compensation awarded was deducted from the outstanding balance of a loan or other type of credit agreement where the consumer does not receive the award directly).


        We believe it would be counter productive to consumers to implement a total ban on CMCs levying fees on anything other than cash in hand compensation awards. In such circumstances there would be no incentive for CMCs to act for these claimants which would reduce consumer choice.

        The alterative we would support would be to a) make it are quirement for CMCs to warn clients in pre-contractual and contractual informationthat any award of compensation could be subject to off-setting and b) the CMCshould be required to allow the client to choose whether to accept any award that would be liable to off-setting and not to charge in circumstances where the client decides not to accept.


        5) In relation to Client Specific Rule 11, should CMCs be required to tell prospective clients,more clearly and explicitly that their fees would be charged irrespective of whether they ultimately receive a ‘cash-in-hand’ compensation award? (Under this scenario a CMC would need to make clear to the prospective client thattheir fee must be paid independently from any compensation award deducted from the original agreement, should that be the case.)

        See above answer.

        6) Do you have any comments on the proposals to make additional amendments to the General Rules?

        Yes and this relates to iii. in the consultation document,rule 18 - the requirement to keep clients updated as to the progress of their claims and any change to costs
        We are genuinely at a loss to understand why the proposed amendment to client specific rule 18 only applies to instances where a CMC hashad their authorization varied or suspended. One of the most common complaints we receive is from consumers who have handed their claim to a CMC but have not received any updates whatsoever on the progress of their claim, regardless of whether an upfront fee has been paid, for many months and sometimes years and despite chasing the CMC for one. Many CMCs will simply not bother to provide any progress update at all until their claim has succeeded.

        The consultation paper acknowledges that ‘’ Keeping a client informed and providing details of the progress of their case should be a fundamental part of the overall quality of service offered by a CMC. It is also a condition of authorisation that CMCs ensure any service offered meets the needs of the client’’ yet, inexplicably, the proposed amendment would seemingly allow aCMC not to have to provide any update at all except in the event it has had it’s authorization varied or suspended.


        We propose that the rule should require CMCs to provide an initial update within 3 months of the signing of a contract. This is based onthe fact that as the 2 stage complaints system has now been abolished, PPIproviders must give a final response to any complaint within 8 weeks. The final response is critical to any claim and it is something the customer must be made aware of. Therefore a requirement to update the customer within the first 3 months of the start of the claim will encompass the crucial outcome of the final response.

        7) Do you have any comments or views as to the likely transitional or other costs to business that may be incurred by the proposed amendments to the Conduct Rules?


        We cannot see that there would be any significant costs to business as a result of the amendments to the conduct rules save for those businesses that operated dishonestly i.e. those who's business model is to take advance fees on the strength of a sales call and therefore in breach of the existing rules.


        Cost should not be a consideration of conduct.

        8) Would a grace period for businesses to implement any required changes to its business benecessary? If so, how long should the grace period be in order to enable allCMCs to successfully adhere to the amended rule framework?

        There should be no grace period required. CMCs have been repeatedly warned of their conduct through reminders and clarifications of the existing rules which many have ignored. The proposed implementation date of April 2013 is, in our view, too generous as it is.

        9) Do you have any comments or views on the likely costs or benefits to business arising from the proposed amendments to the Conduct Rules?


        In our view it is the costs and benefits to the consumer that matter. This is an industry that has virtually evolved in a regulatory vacuum and any belated costs to remedy this are long overdue.

        10) Do you have any comments or views regarding the current rules in relation to cold-calling?


        It is difficult to articulate just how inadequate and ineffective the current rules on cold calling are. It would be impossible to argue that the vast majority of people wouldn’t want them to be banned. People are fed up to the teeth with them and the CMR needs to grasp the nettle and ban them altogether.

        11) In view of the moratorium that would exempt‘micro-businesses’6 from any new regulation (including amendments to the Conduct of Authorised Persons Rules) until 2014, do you consider there to be any compelling reasons why the proposed changes should be implemented prior to the end of the moratorium period?

        We do not believe that micro-businesses should enjoy any moratorium from new regulation. The size of a business is irrelevant to the level of consumer protection that all claimants should have the right to. Notwithstanding smaller businesses are better placed than medium and large businesses to adapt to new regulation.

        12) The CMR Unit welcomes your views on the Equality Impact Assessment in terms of the potential equality impacts of theproposals. Are there other ways in which these proposals are likely to impact on race, sex, disability, sexual orientation, religion and belief, age, marriage and civil partnership, gender reassignment or pregnancy and maternity that you are aware of? If so, please tell us how, together with any supporting extra sources of evidence

        We see no equality issues with the proposals.

        13) Bearing in mind the Government’s reducing regulation agenda, moratorium on micro-businesses and the general need to be proportionate in our approach; do you feel that further changes to the rules, not covered in this consultation are required in order to further improve the regulatory regime?

        The rule proposals would be adequate so long as they are effectively enforced. The biggest issue we have with the current regulatory regime is the lack of speed and severity of enforcement. That a business such as the notorious LifestyleClaims (whom we have supplied CMR with numerous case studies of egregious rule breaches for over a year) remain fully authorised to operate demonstrates an abject failure in every respect of the performance of the CMR’s enforcement department.

        Last edited by EXC; 28th September 2012, 14:24:PM.

        Comment


        • #5
          Re: CMC Rule Consultation

          Yet another cop out IMHO x

          Comment


          • #6
            Re: CMC Rule Consultation

            Wow, well done Nick. Personally I can't think of anything I could add to your excellent responses.
            Costs should absolutely NOT be a consideration here. These CMC's can spring up from someones sitting room if need be. Micro businesses could theoretically be just as bad as a larger business, if not worse.
            These CMC's know the industry they operate within, the only impact on costs will be a sharp reduction in their up front fees. I sincerely hope this triggers a reduction in the number of sharks entering the CMC industry to make a quick buck.
            "Although scalar fields are Lorentz scalars, they may transform nontrivially under other symmetries, such as flavour or isospin. For example, the pion is invariant under the restricted Lorentz group, but is an isospin triplet (meaning it transforms like a three component vector under the SU(2) isospin symmetry). Furthermore, it picks up a negative phase under parity inversion, so it transforms nontrivially under the full Lorentz group; such particles are called pseudoscalar rather than scalar. Most mesons are pseudoscalar particles." (finally explained to a captivated Celestine by Professor Brian Cox on Wednesday 27th June 2012 )

            I am proud to have co-founded LegalBeagles in 2007

            If we have helped you we'd appreciate it if you can leave a review on our Trust Pilot page

            If you wish to book an appointment with me to discuss your credit agreement, please email kate@legalbeaglesgroup. com

            Comment


            • #7
              Re: CMC Rule Consultation

              Well done an excellent job.

              The one thing that bugs me is that the rule 18, that an upfront fee must be returned to the client if there is no claim within a reasonable time. Presently, according to TS, 8 months is an acceptable time for them to hold the money - which I do not agree with as no where in the MOJ's rules does it actually say 8 months this is ambiguous. Also, then the CMC can take 2 weeks to decide whehter there is a claim for that client and then a further 4 weeks to refund. I agree with Exc that 3 months is more than adequate to deal with these claims and why should the refund not be automatic if there is no claim for the client as soon as it is known.

              Also, if a client changes there mind after a cold call and that they do not receive the pack within the 14 days cooling off period yet the CMC have already debited their credit/debit card the CMC will tell them that they are too late - this is a total nonsense and I agree the time should start ticking once the signed agreement is back and then the money taken from the client not before they have seen the T&C's and be fully aware of what they have signed up for.
              Last edited by TUTTSI; 28th September 2012, 15:41:PM.

              Comment


              • #8
                Re: CMC Rule Consultation

                CMCs should be required to hold insuraance cover to protect client funds, and insurance against claims made by clients for inadequate or negligent services

                Comment


                • #9
                  Re: CMC Rule Consultation

                  We did bring this up at the meeting at the MOJ offices. I think the insurance cover also should include if they go broke.... as many of them do when they know that the MOJ are on to them. I have seen this happen time and time again.


                  Originally posted by SpringerSpaniel View Post
                  CMCs should be required to hold insuraance cover to protect client funds, and insurance against claims made by clients for inadequate or negligent services

                  Comment


                  • #10
                    Re: CMC Rule Consultation

                    And I still think the MOJ should be accountable when people lose money until or indeed if ever any insurance is set up.

                    Comment


                    • #11
                      Re: CMC Rule Consultation

                      They should just ban recorded outgoing message calls altogether, across the board. Drives me insane.


                      I think I disagree with this para

                      Originally posted by EXC
                      The consultation paper acknowledges that ‘’ Keeping a client informed and providing details of the progress of their case should be a fundamental part of the overall quality of service offered by a CMC. It is also a condition of authorisation that CMCs ensure any service offered meets the needs of the client’’ yet, inexplicably, the proposed amendment would seemingly allow aCMC not to have to provide any update at all except in the event it has had it’s authorization varied or suspended.


                      The amendment reads

                      Originally posted by MOJ

                      46.
                      The amended rule would remain applicable only to CMCs who also represent their clients and would read:
                      ''A business must keep the client informed of the progress of the claim, including any significant changes to costs that the client may have to meet, and must inform the client of any variation or suspension of the business’s authorisation status. It must forward any relevant information received from the client without delay''.



                      Maybe the actual amendment needs rewording or splitting in to seperate points.

                      Originally posted by for example
                      18. A business must keep the client informed of the progress of the claim, including any significant changes to costs that the client may have to meet. It must forward any relevant information received from the client without delay.

                      19.
                      A business must keep the client informed of any variation or suspension of the business’s authorisation status.


                      to make it less ambiguous.

                      Although saying that I don't know why they have added it to rule 18 at all as it is covered in Rule 19, and by adding it to Rule 18 kinda says that the Regulator isn't enforcing rule 19 if customers aren't being informed.






                      Last edited by Amethyst; 28th September 2012, 17:21:PM.
                      #staysafestayhome

                      Any support I provide is offered without liability, if you are unsure please seek professional legal guidance.

                      Received a Court Claim? Read >>>>> First Steps

                      Comment


                      • #12
                        Re: CMC Rule Consultation

                        It's a fair cop guv - I didn't read it properly.

                        But I still think it's too wooly just to say they should keep the client informed of progress. Having to give a progress update after 3 months does make a lot of sense to me.

                        Also I forgot about the indemnity insurance which I'll slide in.

                        Comment


                        • #13
                          Re: CMC Rule Consultation

                          Looking more at Rule 18, it '' applies only where a business has a contractual relationship with a client and also represents a client in making a claim. It does not apply where a case is passed to a solicitor or other legal professional.''

                          - I think they should amend the applicability of the entire Client Specific Rules in that first paragraph from IS to HAS BEEN - so the rules apply up until the point it HAS been passed to a solicitor - so consumers are kept informed by the CMC if its not been passed to sols yet (eg waiting for the FOS complaint response etc). AND add in a further Rule in that Client Specific section regarding the '' 19. A business must keep the client informed of any variation or suspension of the business’s authorisation status.''

                          --------------------------------------

                          We propose that the rule should require CMCs to provide an initial update within 3 months of the signing of a contract. This is based on the fact that as the 2 stage complaints system has now been abolished, PPI providers must give a final response to any complaint within 8 weeks. The final response is critical to any claim and it is something the customer must be made aware of. Therefore a requirement to update the customer within the first 3 months of the start of the claim will encompass the crucial outcome of the final response.
                          I agree with this addition - they do need to be much stricter - the amendments proposed by the MOJ are still very flaky IMO
                          #staysafestayhome

                          Any support I provide is offered without liability, if you are unsure please seek professional legal guidance.

                          Received a Court Claim? Read >>>>> First Steps

                          Comment


                          • #14
                            Re: CMC Rule Consultation

                            That's a good point re rule 18. And where it has been passed to a solicitor it should trigger a mandatory update by the CMC in itself.

                            Comment


                            • #15
                              Re: CMC Rule Consultation

                              I've made the amendments to the consultation and sent it off - it had to be in by today.
                              Attached Files

                              Comment

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