Posted: 10th June 2013
Earlier this year the government published new rules to govern the practice of claims management companies (CMCs). Coming into force this summer, the new rules will mean CMCs:
must agree contracts in writing with their clients before fees can be taken
are banned from using inducement advertising
Whilst Ministry of Justice (MoJ) and government action is taking place to this extent, strict regulation of CMCs is not forthcoming. The Financial Conduct Authority (FCA) will not add CMCs regulation to its work load and CMCs remain a side line to MoJ responsibility. (The MoJ’s responsibilities are to reduce re-offending, protect the public, provide access to justice, increase confidence in the justice system and uphold people’s civil liberties.) For this reason, firms should stop waiting for regulating authorities to save the day and take a strategic firm approach to this headache.
There is much talk of engaging with CMCs but this need not be an end in itself. Put within the context of a longer term strategy of making CMC complaints to your firm obsolete, the shorter term CMC engagement begins to make more sense.
Ongoing priority: report abusive CMCs. The British Bankers’ Association and MoJ must hear which CMCs are causing problems before they can do anything. As an upstanding citizen of the financial services industry, make it your duty to report problem CMCs to bring them to justice via the means that currently exist.
Short term priority: manage your relationship with CMCs. Open up lines of communication with the major CMCs contacting your firm. Employ a full time point of contact at your firm with suitable authority: this person will positively engage with major CMCs to reduce invalid claims helping them to understand your internal structure and processes.
Long term strategy: make sure customers understand that complaints need not go through CMCs. Most firms think customers know they can complain directly to the firm because it says this somewhere on the firm’s website. We know how CMCs work: they bombard TV watchers with adverts, they text, call and leave no consumer untouched. That approach has worked to the extent that large numbers – even those without a policy – complain via CMCs.
Get creative. Engage with customers to regain their trust. Educate them so that they know complaining to your firm direct is the best and easiest option. Perhaps start a campaign to elevate customers who have complained successfully to your firm. “I complained to my bank/BS and didn’t give a penny to a 3rd party!”
A long term CMC strategy is a must. Make it your goal that your customers feel well enough informed, trust you and have an easy enough method to complain that within two years (or any reasonable time frame) not one customer wishes to use a CMC. Bogus CMC claims will be dealt with by the MoJ.
CMC engagement simply bridges the gap until your customers come to you, not a CMC. Having the strategic aim of wiping out CMC contact to your firm is the motivation behind a shorter term CMC engagement strategy. The outcome? A customer base more trusting, CMCs aware their chances with your firm are lower, reduction in bogus claims over time and compensation in the customer’s pocket, not a CMC’s.