(11 years, 9 months ago)
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I agree. Quite often, the texts are from abroad from what is almost a harvesting service. Although companies should not be sending unsolicited texts and making unsolicited phone calls, they will go back years and years and say, “Well, you gave us your details. You didn’t tick the box years ago to say that you didn’t want to receive marketing texts.” It is very hard to disprove that. There is a system whereby people can forward spam texts to their mobile provider to get them blocked, but there are different numbers for different mobile providers, and people have to remember the code to forward them and actually take action to do that. I do not want to do that; I just do not want to get the texts in the first place.
Analogous to unsolicited texts are unsolicited e-mails. One can see that many such e-mails come from abroad—in my case, from New York, curiously enough. Surely, though, what we should look for in terms of regulation is where those introductions end up. In other words, if anyone takes up cases that have been harvested in that way, should there not be some regulation to try to tackle the people who are then accepting the reference?
I agree. In this new world of electronic communications, there need to be new regulations to stop people being bombarded with texts, phone calls and e-mails that they spend their time deleting.
Let me move on. The consumer has contacted the claims management company; they have had the text and believe that they might get some money. As we have heard, some companies immediately demand an up-front fee in addition to a win fee. I have spoken many times in other debates of the detriment that up-front fees cause in the area of debt management plans. That applies equally in the claims management area. People are being persuaded—I hesitate to use the word “conned”, but it could well be appropriate—to give their credit and debit card details, as we have heard, and deductions are being made before any agreement has been signed and before people even know what they are signing up for. Indeed, the agreement is often vague to the point of misrepresentation.
Citizens Advice has seen clients who signed documents stating unequivocally that the service was free, but when they queried a service charge of 25% plus VAT on the award, they were sent a second, unsigned document that set out the service charge, which they had never seen before. The claims management company has then started court action to recover the service charge of about £300 from the award of approximately £1,000. The person in question believed, according to the document that they had seen, that it was a free service. I repeat that they had never seen the document that said that there was a service charge. It is obvious that all contracts should be written in clear English, be displayed on any websites and be valid only if signed by the consumer. I agree with the 81% of consumers in the Which? survey who say that up-front fees should be banned.
Some people do choose to use the services of a claims management company rather than claim themselves, despite the fact that it is an easy process. At this point, I would like to put in a plug for the MoneySavingExpert website, which has a very clear guide to claiming. It is completely free and very quick to do.
However, people should not be bullied and harassed into signing up. They should understand the terms of the contract that they are signing and be happy to accept them. They should not be subject to up-front fees and they should be able to complain if the service that they receive is not satisfactory, which it is not in a number of cases. I hope that the legal ombudsman will be able to take such complaints very soon.
Those of us who do not wish to take out a payday loan, a debt management plan or a claim against mis-sold PPI, and hopefully never will wish to, and those who have not had an accident should not be harassed by unsolicited phone calls and texts and should not need to take action to avoid them. We should simply be able to opt in to receive texts and calls if we want them. The default position should be the status quo: no call, unless requested.
The claims management industry is out of control. It preys on vulnerable people by promising large sums of money and often failing to deliver. At the moment, it is operating to the detriment of the consumer by charging up-front fees and unwarranted service charges for providing very little service. Claims management companies are getting money for old rope, as my mother would have said. It is our job to ensure that they are strictly bound and tied up in regulation.
That is absolutely right, but my hon. Friend’s point also endorses what I have said, because if the banks had been quick enough post-2004, the problems with claims management companies would not have developed. In a sense, the companies are taking advantage of the banks’ recognition of the liability, and the recognition more generally, to siphon away as much of the money as they possibly can.
Hon. Members have already drawn attention to some misgivings. Mr Kevin Rousell from the Ministry of Justice, who has responsibility for the relevant portfolio, addressed our all-party group. He said that the Government intended to change the rules on advertising on television because they recognised that many of these companies used the label “Regulated by the Ministry of Justice”, as though it were some sort of Government endorsement. Many companies that have had complaints raised against them, including some that my hon. Friend the Member for Thurrock referred to, use the fact that they are regulated by the Ministry of Justice as a badge of honour. The Ministry of Justice recognises that it is used misleadingly: people think that the Ministry of Justice in a sense endorses the activities of such companies, whereas the reality is that it is in the process of getting a grip on their activities.
The hon. Member for Makerfield referred to the Which? survey, which I was also going to draw attention to, primarily because it was undertaken more than a year ago, so we have known for 13 months that up to 60% of claims management companies were probably completely ignoring the rules. I reiterate that this is not an attack on claims management companies. I wish that the 40% who obeyed the rules had been the example for the whole industry. It is not good enough for the Claims Standards Council to say that debating the problems would withdraw access to justice, because it places itself in the position of excusing the failure of 60% of its members to comply with the rules.
Does the hon. Gentleman agree that the fact that 60% of companies are failing demonstrates that there should be powers to suspend companies that act to severe consumer detriment? We should not allow them to have a business plan predicated on being able to carry on for a couple of years, then drop and start up again with another name.
I not only agree with that point but think that it makes the case for taking much more severe action. The flow of PPI cases will undoubtedly work its way through the system and people will look for other sources of revenue, so by the time we catch up, I fear that the horse will have bolted. For that reason, we must have firm regulation.
The problem is that there is confusion about who regulates this field. We have a claims management regulator within the Ministry of Justice, but that was set up to approve, as it were, or otherwise, people engaged in the business. It has been responsible for the industry increasing from 40 companies to 3,007, according to its last annual report. As my hon. Friend the Member for Thurrock indicated, the regulator’s powers are limited, which is why the Government have been rightly looking at how they can firm up the process, including introducing an independent complaints process and placing the responsibility for it with the legal ombudsman. The chief ombudsman, Adam Sampson, also appeared before the all-party group. Hon. Members who were present will know that he is enthusiastically looking forward to looking at such complaints.