Regulations toughened for rogue claim companies
Tough new regulations are being introduced as the part of a package to crack down on the rogue firms responsible for bombarding the public with misleading advertising and flooding banks with unsubstantiated claims for compensation – at a cost to other customers.
Fines will be used to make sure that those employers which remain in the industry follow the rules – and that they pay for it when they do not.
The fines will be brought in as part of law changes being made through the Financial Services (Banking Reform) Bill and are expected to take effect next year.
More than 1,100 companies specialise in helping people make claims for compensation for mis-sold financial products (like Payment Protection Insurance (PPI)). Banks have complained that some firms are responsible for deluging them with inaccurate and incomplete claims which have caused unnecessary costs and major delays in resolving genuine claims.
The new rules being published include making sure claims companies uphold their duty to make sure the claims they are submitting have a realistic chance of success, and ensuring full evidence is provided to back up any allegations. Firms will also have to carry out thorough audits of how their data has been gathered, so they can no longer ignore leads which have been found by illegal marketing texts and calls.
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