MoJ cracks down on CMCs

The news that claims management companies (CMCs) will now be regulated by the Legal Ombudsman will be well received by many in the insurance industry.

Reports today say that misbehaving CMCs will now be made to pay consumers compensation of up to £30,000 under new plans announced by the Ministry of Justice (MoJ).

But even more telling is the fact that the MoJ, which has regulated CMCs since 2007, has handed over the power for dealing with complaints about the firms to the ombudsman, albeit it will still retain some oversight of CMCs through its Claims Management Regulations Unit arm.

Many insurers and brokers believed that the MoJ lacked the teeth to dish out the appropriate punishment to errant CMCs, with no power to award claims compensation.

However the ombudsman is a watchdog, so therefore should be more effective at meting out the necessary action and is even deliberating whether to increase the cap on consumer payouts to £50,000.

Labour warns of Solvency II’s anti-competitiveness

The Labour Party has become the latest body to attack Solvency II, warning it could affect UK insurers’ competitiveness outside the European Union.

Shadow business secretary Chukka Umunna and shadow chief secretary to the Treasury Rachel Reeves made their feelings known in a letter to business secretary Vince Cable and chief secretary to the Treasury Danny Alexander, raising concerns that investment in infrastructure projects could be reduced, while access to finance for UK business could be restricted and a greater burden would be placed on the UK economy.

Prime Minister David Cameron and the Mayor of London Boris Johnson waded into the debate earlier in the year and last week the chair of the European Parliament’s Economic and Monetary Affairs Committee (Econ), Sharon Bowles, accused certain leading German MEPs of attempting to “jettison the whole of Solvency II”.