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Dubious Claim Management

Updated: Mar 26, 2018

Dubious Claims costing a fortune - and were all paying!'



Claims Management Companies are significantly assisting MoneyCheats to make inflated or false compensation claims. But they are also in some cases, cheating on their clients as well by failing to refund up-front fees and delaying passing on funds for successful claims. The total number of CMCs has fallen from a peak of 3,213 in 2011 to 1,388 in 2017.


Here is how they were operating over the 13 months fromJanuary 2017 to January 2018. Whilst much attention has been paid to holiday sickness claims, the Ministry of Justice Claims Management Regulator’s Annual Report shows that claims management companies earned almost £6.3 billion in the last ten years, of which £3.4 billion was in respect of financial products and services.

Whilst the majority of such claims are justified, this does appear to be an area of rich pickings for MoneyCheats, which has yet to be uncovered.


January 2017 - 349 Financial Ombudsman decisions featured a claims management company between 1st December 2016 and 26th January 2017. Of those 349 decisions, just 75 complaints made by a claims management company were upheld. Fewer than a quarter of complaints made on behalf of people by CMCs were actually deemed legitimate and worthy of compensation by the FOS.


February 2017 - The Legal Ombudsman has been handling complaints about claims management companies for two years. Prior to January 2015, there was no avenue of redress for consumers who experienced a service that was less than reasonable. There were 23,000 consumer contacts in the first year and around 32,000 in the second. To date, the Legal Ombudsman has accepted 4,683 complaints for investigation. The two main areas of complaint relate to delay (22%) and CMCs failing to refund upfront fees as agreed (27%). Complaints about delay include failure by a CMC to issue financial claims to a lender within a reasonable timeframe and failing to keep customers updated on the progress of their claims.


The Ministry of Justice’s Claims Management Services Regulator is to examine the activities of claims management companies and solicitors after a surge in holiday sickness claims. The action follows reports that claims

management companies have moved into the lucrative holiday sickness market after the government acted to curb bogus compensation cases for whiplash injuries caused by car accidents. Association of British Travel Agents members have reported dramatic rises in the number of gastric illness claims, far exceeding reported sickness in resorts. Spanish hoteliers have also reported increases in sickness claims made by British holidaymakers but not from their German and French counterparts, raising suspicions about fraudulent claims. One of the biggest claims management companies, Cartel Client Review, was been shut down by the Ministry of Justice.


The MoJ has been investigating CCR since February 2016 after complaints from customers that they were owed money. Cartel's associated firm of solicitors, CCLS, was also been shut down by the Solicitors Regulation Authority. CCR is thought to have taken about £20 million from up to 70,000 customers over the past two years. Based in Manchester CCR was one of the biggest firms in the claims management industry which has sprung up in the past few years. The firm advertised its services widely, inviting people to pay a fee of £495 for which it would check if their debts, such as on credit cards and other loans, could be legally challenged and written off. Hundreds of people have been complaining to the authorities, as well as to the BBC and other media organisations, that after paying their fees they had heard nothing for up to two years. That was despite the firm's contractual promise to refund the fees in full if it was found on subsequent examination that the customers had no case. Money is not available to be able to be refunded back to the clients, Cartel maintains and the MoJ is less than helpful on this point saying that customers of CCR have a private contract between themselves and the firm in which the MoJ cannot intervene directly because it is not a regulatory matter for which the MoJ has responsibility.


March 2017 - In the ongoing saga of holidaymakers submitting claims against hotels and tour operators for sickness whilst on holiday, the Solicitors Regulation Authority has announced that it is ordering a number of law firms to prove how they have sourced holiday sickness claims. Citing concerns about misconduct, the regulator has contacted a number of companies to find out how they have sourced claims, how many claims have been settled, and what fees they received as a result. The SRA has asked the firms for copies of all agreements and fee sharing arrangements with Claims Management Companies too. Payment or receipt of referral fees has been banned for personal injury claims since 2013.

Basingstoke based Road Accident Consult, trading as Media Tactics, that made 22 million automated marketing calls has been fined £270,000 by the Information Commissioner. Automated marketing calls, which play a recorded message, can only be made to people who have specifically agreed to receive such calls. Media Tactics did not have the necessary permissions. The recorded messages related to a variety of subjects including PPI, personal injury claims and debt management.


April 2017 The explosion in gastric illness claims by British holidaymakers made national news in Spain as Spanish hoteliers complained of being held hostage by the UK travel industry. Spain’s national TV network Channel 6 reported false food-poisoning claims: the trick Brits use to have free holidays in Spain. Hoteliers and insurers are furious that UK travel firms opt to pay claims from UK claims management companies and pass the costs to hotels rather than go to court. A pharmacy receipt for over the counter remedies is sufficient for the tour operator to accept the claim.


In the Balearic Islands complaints have increased 700% in the last year, but the only ones who get sick are the British. Claims management companies get paid because it is cheaper for the operators to settle than fight the claim. They pay and then reclaim from hotels. However, at a meeting held in Majorca, Jet2holidays discussed plans to curb the actions of claims management touts with the Ministry of Justice, representatives of the Mallorca Hotel Business Federation, the Guardia Civil police force and the national police commissioner on the island. It was agreed that information on individuals engaged in touting and creating false sickness claims collected by police in Majorca and the Guardia Civil would be sent to Europol, which would then pass the intelligence on to British police and the Ministry of Justice. Jet2holidays said it hoped the new international approach would help undermine the ongoing problem with false sickness claims, warning that the UK was becoming known as the fake sick man of Europe.


The Association of British Travel Agents has set up a new, independent Alternative Dispute Resolution Scheme to resolve personal injury claims, including holiday sickness claims, up to £10,000. The scheme is administered by the Centre for Effective Dispute Resolution and is a voluntary process available to claimants who are unable to resolve their claim through the internal complaints process. The new initiative follows the 434% increase in the number of gastric illness claims since 2013, largely as a result of claims farming by Claims Management Companies, who are looking for fresh revenue streams following changes to the personal injury motor market. These claims now represent nine out of ten personal injury complaints received by members of ABTA. The scheme is intended to reduce the cost of claims for holiday companies and their insurers by removing claims from civil litigation, thereby saving procedural and claimant representative costs. How effective this will be at curtailing claims numbers of what are largely farmed claims remains to be seen. Why would anyone use it if CMCs are more effective in getting success from dubious claims?


May 2017 - British holidaymakers visiting Portugal have been warned they face prosecution if they lodge bogus food poisoning claims against hotels. The Foreign and Commonwealth Office has updated its travel advice, urging visitors only to pursue genuine complaints. The move follows a similar change to guidance for tourists in Spain, after cases were recorded in Benidorm and Valenica. The warning also coincides with the release of undercover footage filmed by private investigators for Jet2Holidays, which saw a rogue tout in Benidorm coaching tourists last year into making bogus compensation requests for a potential profit of £3,000.


There are reports of a possible Spanish holiday ban on all inclusive hotel deals after reports of fake food poisoning claims. Bogus gastroenteritis claims are said to have soared by 700% in the past year. Hotel owners say they have been fleeced out of £42 million in the past 18 months, with some claims are being put in as long as two years after the holiday took place. Each pay out reportedly costs a hotel up to £5,000 a time.


June 2017 - The Financial Guidance and Claims Bill was announced in the Queen’s Speech. It is designed to tackle widespread malpractice among insurance claims management firms. It will see the Financial Conduct Authority take over supervision of all claims management firms and complaints handling will go to the Financial Ombudsman Service. The bill will ensure that senior executives at claims management companies are held personally accountable for the actions of their businesses.


British holidaymakers could face criminal charges as police look to stem a rise in fraudulent sickness claims being made against tour operators and hotels. Police have been considering prosecutions against tourists falsely accusing their accommodation of giving them food poisoning, with Britons in Spain deemed some of the worst offenders. Since 2013 there has been a 434% rise in the number of gastric illness claims made by British tourists, according to the Association of British Travel Agents. Detectives from City of London’s insurance fraud department confirmed that they were currently assessing material handed to them on false holiday sickness claims. Many customers say they were asked to make claims bigger or broader. Claims are even coming from people who have not made bookings, hoping they will wash through the system because of the number coming in. Complaints Management Companies have been increasingly making their presence known on social media with posts on Facebook promising amounts of £700 up to £40,000, adding you don’t have to have been seriously ill to be able to claim . One said: This couldn’t be any easier guys and pay-outs take about 4 weeks on average. Well in time to pay for your family’s next summer holiday!!!


Sean and Caroline Bondarenko are being counter sued by the owners of a five star hotel on the Greek island of Crete after submitting a claim for £10,000 relating to an illness suffered at the resort. The couple, from Darlington, claimed the food and drink at the Caldera Palace Hotel – run by Atlantica Hotel Management – made them sick during their one week stay in October 2013. The hotel company has launched a counter claim of £170,000 against them for damaging its reputation. The couple's compensation bid was not submitted until three years after their stay, booked through Thomson Holidays, when they were contacted by a claims management firm. Now the couple are trying to drop their claim and blame a company of solicitors for embellishing the facts. The firm, Opes Law, denies any wrongdoing. The Bondarenkos say they would not have made a claim if the claims management firm had not got in touch and asked the solicitor to drop the case because they felt uneasy about it, but were told they would have to pay legal costs. Mrs Bondarenko said: “I was horrified when I saw the court papers which listed all these negative things we were supposed to have said about the hotel. We never said any of those things. I rang the solicitor and she told me not to worry about it. We are terrified for our future and petrified we will lose our home.” A spokesman for Opes Law said the allegations are unequivocally denied and that Opes takes its duties to its clients seriously. When things occasionally go wrong, clients are advised to use its complaints policy and procedures to resolve any dissatisfaction.


A company behind 99.5 million nuisance calls has been fined a record £400,000 by the Information Commissioner. Keurboom Communications Ltd has been issued the highest ever nuisance calls fine after more than 1,000 people complained about recorded – also known as automated – calls. The calls, made over an 18 month period, related to a wide range of subjects including road traffic accident claims and PPI compensation.


July 2017 - During the question and answer session at the Financial Conduct Authority annual public meeting on 18th July, a member of the audience said he was aware that some claims management companies were allowing members of direct sales forces to profit twice from mis-selling practices. The member of the audience at the meeting at the QEII Conference Centre in Westminster said claims management companies were being helped by members of providers' direct sales forces to pinpoint who to contact about providers’ past product pushes. He said: They got paid upfront commission for pushing these products for providers and are now getting paid back end commission by being paid referral fees by ambulance chasers.


Claims management regulators are briefing the Solicitors Regulation Authority on solicitors suspected of malpractice over the handling of holiday sickness claims. The Ministry of Justice’s Claims Management Regulator reported in mid-July that action to investigate rogue elements of the industry has been stepped up in the past three months. Action dedicated at tackling holiday sickness claims began in April this year. From April to June, six unauthorised claims management company websites were shut down, 40 CMCs were visited or audited and two investigations were started. In the previous quarterly update, the regulator did not report any action, merely the start of talks with the travel industry about how to deal with increasing numbers of claims. The net is now closing in on solicitors with links to fraudulent claims or who acquire cases through cold calling. The claims management regulator says it is working with the SRA and Association of British Travel Agents members who have provided intelligence, information and evidence on market practices. The regulator has established a dedicated project team to monitor this sector closely, and deal quickly and effectively with any misconduct by regulated CMCs, or those who are simply operating completely illegally.


Deborah Briton, 53, and partner Paul Roberts, 43 together with Briton’s daughter Charlene, 30 are accused of having lodged bogus compensations claims with Thomas Cook to try to win £52,000. They pleaded not guilty to six counts of fraud. But they were found guilty in October. Deborah Britton was sent to jail for 9 months and Paul Roberts for 15 months. The family went on an all-inclusive trip to Mallorca, and the fraud totalled £52,000 in claims put forward by David Norman Solicitors for food poisoning. Sentencing, Judge David Aubrey QC said the couple's claims had been a complete and utter sham. Amy Hughes, a 28 year old holidaymaker from Holyhead in North Wales has been ordered to pay £25,000 to holiday operator Thomson, after a court found that she lied about getting sick to claim compensation. She had spent 11 days at the five star Iberotel Palace hotel in Sharm El Sheikh, Egypt, with two friends in July 2011. Two years after returning home, in July 2013, she made a compensation claim for sickness against Thomson through a North Wales law firm. She claimed she had been ill while staying at the hotel and had not eaten anywhere else. The case was due to be heard in court last October, but Mrs Hughes dropped her claim without any explanation. Thomson said that after investigating, it had discovered Mrs Hughes had eaten only a small number of breakfasts at the hotel, while a friend had confirmed that she had eaten Chinese food in the resort. Mrs Hughes denied this, but Thomson decided it had enough evidence to pursue her through the courts for costs it had incurred building a defence. On 5th July, a Recorder at Wrexham County Court determined that Mrs Hughes had been fundamentally dishonest and must pay Thomson £25,000 by 4.00 pm on 6th October.


Thomas Cook has also won a civil claim for £10,000 compensation from Julie Lavelle and her partner Michael McIntyre after a court branded them as fundamentally dishonest, their £10,000 claim for holiday sickness, as wholly implausible and ordered the couple to pay costs of £3,744. In the summer of 2013 Julie Lavelle, her partner Michael McIntyre and their two children took a two-week all-inclusive Thomas Cook package at the Parque Cristobal Hotel at Playa del Ingles, on the Spanish island of Gran Canaria. They made no mention of any illness at the time. But in May 2016, almost three years after the holiday, the couple’s solicitors, Bridger & Co of Llandovery, forwarded a claim asserting that the whole family had suffered gastroenteritis for almost the entire length of their holiday.


August 2017 - The Ministry of Justice Claims Management Regulator’s Annual Report published on 4th August shows that claims management companies earned almost £6.3 billion in the last ten years. CMCs dealing with financial products and services claims made £3.4 billion between 2007 and 2017. The Regulator has granted licences to over 6,800 CMCs since 2007, audited 2,022, issued 478 warnings and £2.8 million in fines. It has also cancelled 1,387 licences and received nearly 94,000 enquiries or complaints from people in relation to CMCs. The report also says that after a period of rapid growth during the first four years of regulation, there has been a steady decline in the size of the claims management industry since 2011 as a consequence of major regulatory reforms. The total number of CMCs has fallen year on year from a peak of 3,213 in 2011 to 1,388 in 2017.


The rate of decline has slowed in the last two years however, as the market began to show signs of consolidation. Personal injury remains the largest claims management sector in terms of the number of CMCs in operation, but the financial claims sector has superseded it for four consecutive years, generating more than twice the turnover of the once dominant personal injury sector. Ministry of Justice officials raided the premises of a number of claims management companies and found 34 unlicensed firms fuelling a surge in the number of fake sickness claims being made by British tourists. The Claims Management regulator has issued six warnings, launched two investigations, and removed the websites of six claims management companies. More than 40 other firms offering no-win, no-fee services were also issued with compliance advice. British holidaymakers submitted 35 times as many compensation claims for illness on holiday compared with German tourists. Last summer UK holidaymakers submitted almost 4,000 sickness claims compared with just 114 from Germans. The figures are based on 750,000 British holidaymakers and 800,000 Germans. Scandinavians submitted 39 claims for 375,000 holidaymakers.


Caroline Wayman chief ombudsman & chief executive of the Financial Ombudsman Service is a non-executive director on the Board of the Claims Management Regulator. She must therefore be aware of CMCs encouraging bogus claims. Yet this awareness does not appear to have crossed over into the handling of financial services complaints from CMCs which have generated for them more than twice the turnover of the once dominant personal injury sector.


Allsure Ltd, based in Winckley Court in Preston, a claims firm that encouraged holidaymakers to submit bogus insurance claims has been stripped of its licence. It was found to be encouraging people to lie and submit fake claims for illness on holiday. The Claims Management Regulator has stripped the firm of its licence to practice. It can no longer offer regulated claims management services to new or existing clients.


September 2017 - The Solicitors Regulation Authority is investigating twelve law firms it suspects of having potentially improper links with claims management companies over holiday sickness claims. Allegations against the legal firms include them making payments for holiday sickness referrals from claims companies. The SRA said it had evidence of firms pursuing claims without the proper instructions of claimants; of failures to ensure all documentary evidence was collated; and of highly improper advice issued to clients. A statement issued by the SRA said that lawyers should not bring cases, or continue with them, where there is a serious concern about the honesty or reliability of the evidence.


A Welsh firm responsible for 146 million nuisance PPI calls has been given a £350,000 fine by the Information Commissioner - although it is unlikely that the penalty will be paid because its directors are currently seeking to dissolve the company. Your Money Rights, which had its authorisation as a claims management company cancelled in May, instigated 146,020,773 automated direct marketing calls in under five months between March and July 2016, with some complainants saying they had received more than one call a day. The company did not identify itself on the calls, which made it harder for people to complain about the firm’s behaviour. Companies can only make automated marketing calls to people that have previously consented to such communications from them. YMR did not have this.


October 2017 - The increase in holiday sickness claims has been coupled with an increase in claims management companies locating themselves in resorts encouraging holiday makers to submit fraudulent or exaggerated claims for a cash incentive. In Tenerife, one outfit linked to a UK based claims management company allegedly makes the rounds of hotels and resorts at the wheel of an old yellow ambulance with Claims Clinic emblazoned on the side, seeking out holidaymakers who may have suffered food poisoning or other gastric illnesses during their stay and encouraging them to bring personal injury claims.


The Government has recognised the concern that holiday sickness claims are being brought with little or no evidence in support. Claimants will often not have any contemporaneous evidence in support of their claims given they will not have complained in resort, or visited a doctor whilst in resort, or on their return to the UK. However, many legal firms are now dropping holiday sickness claims, up to 6,500 cases according to reports, due to the increased regulatory attention. Claims Management Companies are routinely looking for new opportunities. Insurer Direct Line examined more than 2,000 drainage claims made in the last year. It found that 54% of them had been inflated or were invalid. In the first quarter of 2017, it estimates the number increased by 22% compared to 2016, with no apparent or logical explanation. Many people have cover for blocked drains as part of their home insurance, but increasingly a CMC will arrange to handle the claim for them. Some drainage firms appear to be selling details of their clients to CMCs.


November 2017 - The director of a claims management company that made almost 6.4 million automated marketing calls in breach of regulations has been fined £250,000 and disqualified as a director for seven years. Hassim Iqbal, 34, from Blackburn, has been disqualified from acting as a director for failing to ensure that Check Point Claims Ltd complied with regulations relating to the conduct of its business leading to the Ministry of Justice withdrawing its authorisation to provide claims management services. The Information Commissioner also issued a monetary penalty notice for £250,000 as CPC had sent almost 6.4 million automated marketing calls without prior consent having been obtained from the recipients. An investigation found a further 11 million calls were made but not connected. CPC traded from July 2013 to February 2016 and generated leads for local solicitor firms but went into liquidation in March 2016.


December 2017 - On 14th December the Information Commissioner’s Office executed a search warrant and searched two addresses in Nottingham as part of an investigation into a network suspected of making hundreds of millions of nuisance calls. ICO enforcement officers were joined by colleagues from the Claims Management Regulator and Nottinghamshire Police to execute the search warrant at an office building in the city. A house was also searched at the same time. The operation was part of an ICO investigation into a network of people and associated companies believed to be responsible for bombarding UK citizens with hundreds of millions of unsolicited automated calls promoting personal injury claims.


The Claims Management Regulator is also investigating potential breaches of the Compensation Act 2006. Some solicitors’ firms are running the risk of misconduct through their dealings with claims management companies, the Solicitors Regulation Authority has reported. The regulator issued a warning notice expressing concerns about the way certain firms are bringing in work. This is the second time in two years the SRA has felt compelled to remind solicitors of their responsibilities, and coincides with a review of 40 firms that uncovered issues which could lead to misconduct. Among the issues identified are a failure to meet with and take instructions from clients; settling injury or sickness claims without a medical report; and paying damages to third parties instead of directly to the client. In extreme cases, firms have brought claims without the knowledge of the named client. The review of 40 firms in the sector found most had adequate systems and processes in place to curb wrongdoing. However, some rely on just one claims management company for leads, do not adequately train staff and/or fail to carry out enough checks at the outset of the claim to reduce the risk of fraud.


The Claims Management Regulator has stripped Preston based claims management company Allsure Ltd of its licence after finding that the company encouraged holiday goers to fabricate or embellish symptoms of gastric illness to get compensation. The regulator said that evidence it had gathered also showed that Allsure had used deceptive sales scripts, which were exaggerating expected pay outs to entice consumers.


A Welsh claims management company has abandoned its appeal against a regulatory ruling that shut down its operations in August. Llanelli-based MJE Associates (Wales) was in breach of cold calling rules that led the Ministry of Justice’s claims regulator to shut it down. The regulator found that the company had breached of five rules set down by the CMR, including by cold calling. It also broke rules around responsible conduct and data protection, while its management was found to be lacking in experience; one rule it broke was to have someone of necessary competence with a knowledge of regulation, in charge.


January 2018 - The Association of British Travel Agents has revealed that as many as 9.5 million British adults have been approached about making a compensation claim for being sick while on holiday. New figures from a YouGov survey of British adults that found that almost one in five people (19%) had been contacted about making a compensation claim for holiday sickness. The most common way survey respondents were approached was over the ‘phone (14%), followed by text (7%) and email (7%). Some also reported being contacted on social media (3%), while others were approached in person (2%), including at airports or while on holiday.


Since 2013 the number of claims for holiday sickness has risen by 500% with a large number being fraudulent. ABTA has released the survey results as part of its Stop Sickness Scams campaign against false claims that the association argues are costing the travel industry tens of millions of pounds. Evidence from the travel industry and customers highlights that some claims management companies are contacting consumers out of the blue, encouraging them to make a false claim and often misleadingly saying there is a pot of money waiting to be claimed. However, making a false compensation claim for holiday sickness is an act of fraud and if prosecuted could result in a large fine, criminal record or jail term of up to three years, but many claimants are unaware of the seriousness of the penalties.


Barrington Claims has been fined £250,000 by the Information Commissioner after it breached consent rules. It had already had its authorisation removed by the Ministry of Justice’s Claims Management Regulator. The Port Talbot based claims management company used automated marketing calls to reach users who had not authorised it to do so. Between 22nd February 2016 and 23rd May 2016, Barrington Claims made a total of 15.3 million calls telling people they were entitled to a PPI refund. The CMC was using an outbound dialling platform to upload a message and transmit vast numbers of automated calls.


Miss-sold Products UK Ltd made 75 million automated marketing calls between 16th November 2015 and 7th March 2016. The calls contained recorded messages, primarily promoting PPI compensation claims, but the company did not have the recipients’ consent for making marketing calls. It has been fined £350,000 by the Information Commissioner. It also failed to identify the organisation making the calls, while it used so called added value numbers that generate revenue when an individual calls the number, which is then apportioned and passed to associated companies and the network carrier.

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