Solicitors dealing with unregulated claims referral companies or claims management companies could face disciplinary sanctions or even prosecution from this week.
Regulation of claims management services—which was brought in by the Compensation Act 2006 and is backed by criminal sanctions—came into force on Monday.
Solicitors have been warned by the Solicitors Regulation Authority (SRA) to check the status of any claims management company which provides their firm with regulated claims management services.
SRA chair Peter Williamson says: “We expect solicitors to take care that they are only using companies which are properly regulated. These are important measures designed to protect the public from claims farmers who have been using unscrupulous tactics and aggressive selling techniques.”
Claims management companies must comply with new rules of conduct covering advertising, marketing and soliciting of business. For example, clients must be given certain information before they sign a contract and there is a duty to have a complaints procedure.
Mark Boleat, head of claims management regulation at the Department for Constitutional Affairs, says: “We will be closely managing the activities of claims management businesses and will not hesitate to take regulatory action where necessary.”
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