The backbench debate on claims management companies last Thursday was a predictable litany of appalling abuses by rogue firms with many MPs taking the opportunity to name and well and truly shame firms.
It shed little new light on the problems but it did draw a degree of consensus on some of the challenges, perhaps providing a little more impetus to the creation of tougher regulatory powers promised for next year.
Among the major concerns raised by MPs were the marketing tactics used to generate payment protection insurance and personal injury claims, especially the barrage of unsolicited phone calls, text and emails that most people are nowadays subjected to. The MP who initiated the debeate, Jackie Doyle-Price (Con, Thurrock, pictured) left no-one in any doubt about what she thought:"The industry preys on the vulnerable", she told fellow MPs, citing the case of an 87 year old in her constituency who despite being on the telephone preference register was cold-called about PPI and persuaded to part with an upfront fee of £250. All MPs who spoke wanted up-front fees banned.
Yvonne Fovargue (Lab, Makerfield) was among those highly critical of the lack of powers that the Telephone Preference Service of the Information Commissioner had to take action against these marketing scams, a point also hightlighted by Jonathan Evans (Con, Cardiff North and chair of the All Party Parliamentary Group on Insurance & Financial Services). He pointed out that many of the firms that initiated the unsolicited calling and texting are based offshore and very difficult for UK based regualtors to police. The solution, he said, is to punish those firms that bought and made use of the leads.
This was one of the few points on which the junior justice minister, Helen Grant, seemed to have anything new to say. She said that the Claims Management Regulation Unit at the Ministry of Justice is "actively working with the Information Commissioner to investigate and take enforcement action aganist CMCs that accept leads or claims from that type of marketing".
The insurance industry shouldn't sit back and feel smug just because MPs spent 90 minutes slamming claims management companies as it came in for a fair bit of criticism. As many MPs pointed out, there wouldn't be these rich pickings for CMCs if the industry hadn't mis-sold so many products in the first place. Others drew attention to the incestuous links between insurers and CMCs, especially with personal injury claims which many insurers make a quick turn on selling leads to third parties.
Perhaps of most concern to the insurance industry should be the hostility of the shadow justice spokesman, Andy Slaughter. While being critical of the worst excesses of CMCs, he was damming of insurers and, in particular, of the Association of British Insurers. His contribution relied heavily on a brief from the Association of Personal Injury Lawyers which may have helped lend balance to the debate but was littered with some very dubious statements, especially about whiplash claims. With Labour riding high in the opinion polls, the ABI needs to take note of this.
The one area where he did find himself sympathic to the ABI was over its suggestion that the new Financial Conduct Authority could have a major role to play in this area, a proposal also keenly backed by Jonathan Evans.
That said, Mr Slaughter didn't dissent from Jackie Doyle-Price's summing up of the debate: "There is clearly a consensus that consumers are being fleeced. We need to find the villains and ensure that we have a regulatory system that it fit for purpose".
A huge well done to all involved with organising our Remembrance Day event on Friday, including our Corporate Real Estate team. One of them, Ibrahim, took this incredible footage of poppies dropping as he (along with others) leaned (safely!) over the gantry to let them go. pic.twitter.com/pSbapkWBBR— Lloyd's (@LloydsofLondon) November 12, 2018
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