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MoJ suspends record number of credit agreement claims firms 30 October 2009
Steven Jackson (about the author)

The Ministry of Justice barred a record number of credit agreement claims management firms during September, in a 500 per cent rise on the previous month.

In a crackdown on claims management companies, many of whom charge consumers upfront fees of up to £500 to help them challenge debts, the MoJ suspended or cancelled the authorisation of 19 firms in September.

This surpassed the amount of cancellations in August, when the MoJ had reached a landmark figure of 100 suspensions or cancellation of claims management companies’ activities, since regulation began in April 2007.

The number of authorised firms providing claims management services has grown to an estimated 3,000 in the UK.

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Carl Wright, chief executive of specialist financial claims company Cartel Client Review, said: "From the meetings Cartel has had with the MoJ, I am convinced that the MoJ will continue to vigorously monitor and review claims management companies, which will in turn precipitate an increase in the total number of firms whose registrations will be cancelled.

"It is important that any firm that is not capable of fulfilling the MoJ’s requirements and following regulations, should not be licensed to trade within claims management."

The MoJ recently stated that there are a small proportion of firms operating in the claims management market, which are deliberately trying to mislead customers.

Wright added: "Whatever the reason for the cancellation of registration for these individual firms, Cartel welcomes the increase in MoJ supervision and review of individual claims management companies operating within the claims management industry."

The Claims Management Regulation Unit of the MoJ has received information on a scam being carried out in the name of authorised claims management businesses.

Consumers are typically being told that there is a sum of money ready to be paid to them following the payment of a fee to the ‘business’, which they are being urged to send overseas via a money transfer at their nearest Post Office.

Source: Credit Today