Tough new rules are being introduced as part of a package to crack down on the rogue firms which are responsible for bombarding the public with misleading advertising in relation to possible claims against Banks.
Fines will be used to encourage claims companies to follow the rules – and to require them to pay for it when they do not.
The fines will be brought in as part of changes being made through the Financial Services (Banking Reform) Bill and are expected to take effect next year.
There are more than one thousand companies which specialise in helping people make claims for compensation for mis-sold financial products such as Payment Protection Insurance (PPI). Banks have complained that some firms are responsible for deluging them with inaccurate and incomplete claims which have caused unnecessary costs and major delays in resolving genuine claims.
The new rules being published aim to ensure that claims companies uphold their duty to make sure the claims they are submitting have a realistic chance of success, and ensure full evidence is provided to substantiate any allegations. Firms will also have to carry out thorough audits of how their data has been gathered, so they can no longer turn a blind eye to leads which have been obtained by illegal or unlawful marketing methods.
For more information, please visit our website or contact BJ Chong.