Verbal contracts singled out for reform

The Ministry of Justice (MOJ) has launched a consultation to help it rewrite its rulebook for claims management companies (CMCs) and tackle malpractice.

The consultation, issued by the Claims Management Regulator (CMR) arm of the MOJ, suggests three main changes to the current rules:

  • Banning any verbal contracts between CMCs and their clients before fees are taken
  • Requiring CMCs to inform their clients of any suspension or changes to their business authorisation
  • Making sure CMCs are only allowed to say they are regulated by the CMR, not the MOJ

CMR head Kevin Rousell said: “Earlier this month, I said the industry will be subjected to radical changes over the next 12 months with tougher rules put in place. I am pleased to announce the next step in our efforts to drive malpractice out of the industry.
 
“Time and time again we see examples of consumers who have inadvertently agreed to a contract with a CMC without a written contract in place. We want consumers to be better protected by making the terms of any contract clearer.”
 
The consultation will close on 3 October 2012.

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