Financial Guidance and Claims Bill [HL]

Written evidence submitted by the Association of Personal Injury Lawyers (APIL) (FGCB13)

Introduction

1. The Association of Personal Injury Lawyers (APIL) is a not-for-profit organisation which has worked for almost 30 years to help injured people gain the access to justice they need and to which they are entitled. We have more than 3,400 members who are committed to supporting the association’s aims, and all are signed up to APIL’s code of conduct and consumer charter. Membership comprises mostly solicitors, along with barristers, legal executives, paralegals and some academics.

2. APIL welcomes the opportunity to provide written evidence to the Financial Guidance and Claims Bill Public Bill Committee. We have restricted our comments to the issue of cold calling and spam texts for personal injury claims.

Executive summary

3. Cold calling for personal injury claims exploits vulnerable people. It is tasteless and intrusive. It generates the false perception that obtaining compensation is easy, even when there is no injury.

4. The Government is failing to fulfil its commitment to ban cold calling by claims management companies. Proposed new clause 6 does nothing but tinker around the edges of the rules on consent. The rules on consent are incredibly opaque and almost impossible to navigate. The only answer is an outright ban on cold calling.

5. Clause 4 is a watered-down attempt to introduce a ban, and relies on the new single financial guidance body to make a recommendation. The Secretary of State will be under no obligation to accept the recommendation.

6. New clause 9 would introduce the much-needed ban on cold calling by claims management companies, and goes much further in its scope than either clause 4 or new clause 6.

Cold calling for personal injury claims

7. Around 51 million personal injury related calls and texts are made and sent by regulated claims management companies (CMCs) each year [1] , and most people are likely to have received one. Cold calling for personal injury claims exploits vulnerable people. It is tasteless and intrusive. It generates the false perception that obtaining compensation is easy, even when there is no injury.  It brings the whole sector into disrepute. Solicitors are banned from cold calling for personal injury claims, and we fully support this. Unfortunately, CMCs are still free to contact people provided they adhere to certain rules.

8. Contrary to the assertions made by Esther McVey MP, Secretary of State for Work and Pensions, during the second reading debate of the Financial Guidance and Claims Bill, CMCs do not always "benefit the public interest", or provide a "valuable service to consumers".

9. If someone has been injured through no fault of his own, he should contact an accredited solicitor who will be a specialist in that area of law. In personal injury claims, CMCs only act as a ‘middle man’, and it is always in the best interest of an injured person that he seeks the advice of a qualified solicitor.

10. We have long called for a ban on cold calling by CMCs, and have been supported in this by others. James Dalton of the Association of British Insurers and Rob Townend of Aviva both agreed on the need for a ban when appearing alongside APIL’s president in front of the Prisons and Courts Bill Public Bill Committee in the House of Commons in March 2017. A ban would also prove popular with the public, with a recent YouGov survey revealing that 67 per cent of people were in favour of a ban [2] .

11. The apparent lack of urgency from the Government to ban these cold calls and spam texts is not just disappointing, but surprising . The Ministry of Justice is determined to cut down on the number of whiplash claims to the point that it is proposing legislation which will restrict the rights of injured people to claim compensation. It is therefore extraordinary that the Government is dithering about banning a practice which actively encourages whiplash claims, in particular.

A Government commitment to ban cold calling

12. During House of Lords report stage, work and pensions minister Baroness Buscombe conceded that a complete ban on cold calling by CMCs was the right thing to do:

"We know that cold calls continue and understand that more needs to be done truly to eradicate this problem. We have already committed to ban cold calls relating to pensions, and are minded to bring forward similar action in relation to the claims management industry. I have asked officials to consider the evidence for implementing a cold-calling ban in relation to claims management activities, and I am pleased to say that the Government are working through the detail of a ban on cold calling by claims management companies. There are complex issues to work through, including those relating, for example, to EU directives. We would therefore like time to consider this important issue properly, and propose bringing forward a government amendment in the other place to meet the concerns of this House" [3] . – Work and pensions minister Baroness Buscombe, House of Lords report stage, 24 October 2017

13. This commitment followed a previous commitment made by the Conservative party in its 2017 general election manifesto. In its manifesto, the party promised to ‘consider a ban on companies cold calling people encouraging them to make false personal injury claims’ [4] .

New Clause (NC) 6 – a broken promise

14. NC6 represents the Government’s broken promise on banning cold calling by claims management companies.

15. The purpose of the amendment is to prevent CMCs from cold calling someone unless the person has given consent to ‘such calls being made by, or at the instigation of, the caller on that line’. The rules on consent are incredibly opaque and almost impossible to navigate.

16. Changing the rules on consent is not the solution, and will do nothing but add more confusion to the rules on cold calling. Following the breadcrumbs to determine the rules on consent is not easy: the Information Commissioner’s Office direct marketing guidance includes 15 pages on the issue of consent alone [5] . This guidance is littered with caveats, with the use of words such as "usually", "good practice", "best practice" and "in some circumstances". This only adds to the confusion for consumers, and can allow the most determined CMC to find a way to work around the guidance.

17. Merely changing the rules to put the onus on someone to consent to being cold called will not solve the problem of cold calling. People, especially the most vulnerable, will struggle to understand whether they have consented to being cold called, and may not appreciate to what they are consenting. Considering the public’s attitude to cold calling, with 67 per cent of people in favour of a ban on personal injury cold calling, it is hard to believe that someone would knowingly consent to being bombarded by nuisance calls and text messages. A complete ban would mean that the currently very complicated issue of consent never even arises.

18. The Government had earlier recognised that a ban on cold calling was needed, and we fail to see what will have changed in the intervening period for the Government to suggest a change in the rules now. The Government cannot be allowed to break the promise it made to Parliament. A failure to act on the millions of cold calls and spam texts which are plaguing the people of the UK day in day out is inexcusable.

Clause 4 – Cold calling

19. Despite resistance from the Government, opposition peers were successful in amending the Bill at House of Lords report stage. This amendment included a provision which could eventually lead to a ban on some cold calling, but a ban on cold calling for personal injury claims would be by means certain. The clause states that the new single financial guidance body (SFGB) must have ‘regard to the effect of cold calling on consumer protection’, and publish an annual assessment of ‘any consumer detriment’. If the SFGB considers that there are ‘products or services where a ban on cold-calling would be conducive to its functions it must advise the Secretary of State to institute bans on cold-calling and the commercial use of any data obtained by such cold calling’. The Secretary of State will not, however, be under an obligation to ban cold calling, and could choose to ignore the advice of the SFGB.

20. The consumer detriment of cold calling for personal injury claims may not be obvious, but it is a practice which is a scourge on society. Personal injury cold calling is not just a social nuisance, but it can encourage claims which may have very little chance of success, or in the most extreme cases, fraudulent claims. It may never be the intention of someone to claim compensation, but receiving a phone call or text message with a promise of £3,000 in compensation can make it very tempting. Even if someone has been in a road traffic accident, it does not automatically qualify him for compensation, but a cold call or text message can make it seem as if a compensation payment is guaranteed, and this can create false expectations.

21. Relying on the single financial guidance body to make a recommendation, which could be ignored by the Secretary of State, is a watered-down attempt to ban cold calling. The only guaranteed way to ban cold calling is to introduce a clear outright ban in the Bill.

New Clause (NC) 9 – An outright ban

22. NC9, tabled by opposition MPs, would introduce a much-needed ban on cold calling by claims management companies, including for personal injury claims. This clause goes much further than the watered-down attempt to ban cold calling in clause 4, as it lays out a clear timbale for when a ban must be introduced. The Financial Conduct Authority must introduce the ban within six months of the Act coming into force.

23. This amendment addresses the problems we have raised with NC6, as an outright ban would mean the issue of consent doesn’t arise. There would be no situation where a member of the public could unknowingly consent to be cold called.

24. NC9 also goes much further in the type of cold calling which would be banned, and is not limited to banning the traditional method of cold calling conducted by telephone. CMCs will also be banned from making approaches to "to members of the public carried out by whatever means, digital or otherwise…".

25. NC9 doesn’t provide any opportunity for confusion, and it will be clear that CMCs, or organisations working on their behalf, will be banned from making direct approaches through cold calling or otherwise.

January 2018


[1] The economist Oxera has suggested that the public receives 718 million personal injury related calls and texts every year (https://www.aviva.com/media/news/item/aviva-injury-compensation-culture-blitzes-consumers-with-nearly-720-million-nuisance-calls-and-texts-17642/) while a response from the Information Commissioner’s Office to a freedom of information request has shown that regulated CMCs are likely to be responsible for seven per cent of those calls and texts. Based on this, APIL has estimated that around 51 million personal injury related calls and text are made and sent by regulated CMCs each year

[2] YouGov Reports: Personal Injury 2017

[3] https://goo.gl/PGa9LN

[4] Conservative party 2017 general election manifesto, page 59

[5] https://ico.org.uk/media/for-organisations/documents/1555/direct-marketing-guidance.pdf

 

Prepared 1st February 2018