Legal Ombudsman has investigated 4,683 CMCs since 2015

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The Legal Ombudsman has said that it has now investigated 4,683 claims management companies since it took over handling complaints about them two years ago.

The Ombudsman opened its doors to complaints about CMCs in 2015 and use of its service by the public quickly gathered momentum with approximately 23,000 consumer contacts in 2015 and 32,000 in 2016. To date, the Legal Ombudsman has accepted 4,683 complaints for investigation.

The two main areas of complaints received relate to delay (22%) and CMCs failing to refund upfront fees as agreed (27%). Complaints about delay include failure by the CMC to issue claims to the lender within a reasonable timeframe and failing to keep customers updated on the progress of their claims.

Kathryn Stone OBE, Chief Ombudsman said: “The Legal Ombudsman has made a difference to hundreds of people’s lives over the last two years, investigating the service provided by CMCs and where appropriate, recommending financial and non-financial remedies.”

As well as investigating individual consumers concerns, the Legal Ombudsman says that it has also had an impact on the wider claims management industry. It says that it adopts a “tough but fair approach” when trends are identified in a CMC’s service standards. In instances of systemic poor service, the Legal Ombudsman can publicise their decision if they believe there is a risk to consumers.

In August 2016, the Legal Ombudsman published information in the public interest about JAS Financial Advisory Services (JAS). Numerous complaints cited that JAS was not progressing claims, that it was failing to keep consumers updated on progress, and that it often failed to reimburse upfront fees. After trying to engage with JAS, the Legal Ombudsman exercised its power to publish details of the trends as it was in the public interest to do so. JAS has since closed and the Legal Ombudsman played an important role in assisting over 500 consumers, some of whom were able to claim a refund under section 75 of the Consumer Credit Act 1974, others registered as creditors with the liquidator.

Responding to the Ombudsman’s figures, Qamar Anwar, First4Lawyers’ managing director, said that complaints about CMCs were overwhelmingly made up of ones made against CMCs operating in the financial mis-selling market.

“Those of us in personal injury and other areas are still funding its work, however, and so we hope the Ombudsman is preparing for these poorly performing financial CMCs entering our market if the Government’s personal injury reforms – in particular the increase in the small claims limit – come to pass,” he said.

“The Ministry of Justice itself expects CMCs to be on hand to help claimants instead of qualified solicitors, and we are already concerned that firms which currently cannot deal properly with the relatively simple issue of PPI have their eyes on the personal injury market. This would be bad news for injured people and drag down the reputation that trusted and ethical brands such as First4Lawyers have built up.”

 

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Marek Handzel

Marek Handzel is the editor of Claims Magazine. Marek welcomes articles, letters, or feedback from readers and can be reached by emailing marek.handzel@barkerbrooks.co.uk