Tough rules are curbing claims management firms

Claims management company

The number of claims management firms has shrunk by 10% over the past year, thanks to the arrival of tighter rules.

Last month, 1,700 companies were active in the industry, down from 2,435 in March 2012.

The Ministry of Justice claims management unit said it warned 285 companies, suspended seven and cancelled its authorisation of 211 during this period. It also dealt with 16,000 consumer complaints.

Personal protection insurance (PPI) mis-selling and personal injury claims account for 99% of the turnover of authorised firms.

Some of the new rules introduced included a ban on referral fees between lawyers and claims management firms working on no-win, no-fee deals.

Claims companies were also banned from taking fees from customers before a written contract had been signed.

"We have taken strong action to rein in the rogue firms... and the impact is starting to show," said Justice Minister Helen Grant.

If you think you have been mis-sold PPI, you can lodge a claim for redress yourself. Download the Moneywise template letter here.

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