The Ministry of Justice (MoJ) is set to price a host of Claims Management Companies (CMCs) out of the regulation market through a 47% hike in application fees in 2013/2014 and the removal of the current cap on annual fees. Under the new proposals:
• CMCs will face a fee increase in the financial products and services sector
• The application fee will rise from £950 to £1,400
The MoJ which regulates CMCs is looking to replace the funding which will be lost through the ban on personal injury referral fees, due to come into effect in 2013. In a recently released consultation document, the MoJ stressed that the resources the changes are expected to generate will be vital for the protection of consumers and prosecution of “unauthorised traders”.
The document reveals a need to focus on malpractice within the financial products and services sector, to which 90% of all consumer complaints are now related.
The changes are also likely to see the Legal Ombudsman’s jurisdiction widen to incorporate complaints related to CMCs, at an estimated cost of £3m, explained by recruitment, training, IT and marketing expenses. The annual fees for complaint handling will be capped at £40,000 and calculated in relation to turnover.
The consultation period will continue until the 18th December and from the 1st April 2013, the new fees will come into force.
Let’s hope that the Minister of Justice show a bit more backbone in dealing with rogue CMC’s.