Unified Code of Conduct For Financial Claims Management Companies

Transcription

1 Unified Code of Conduct For Financial Claims Management Companies Issued: Monday 22 nd October 2012

2 Introduction This unified Code of Conduct for Financial Claims Management Companies (the Code) is a code of conduct agreed by the industry s three trade bodies, namely: The Claims Standards Council (CSC); The Association of Professional Claims Managers (APCM) and The Association of Regulated Claims Management Companies (ARC). For the purposes of this Code, these three trade bodies are jointly referred to as the JTB. This Code sets professional standards for member firms and represents the interests of its members subject to any specific addendums that may be added by the individual trade bodies. Within this Code a member (or members) of any of the aforementioned trade bodies are referred to as Member (or Members ). The JTB expects its members to act with the utmost honesty, integrity and professionalism. This Code sets out the agreed standards that we expect from our members who are involved in the claims management sector. Meanings Advertising means the use of all mediums in order to market the service to potential customers (including websites, sales scripts, written literature, television advertisements, and so on) APCM means The Association of Professional Claims Managers ARC means The Association of Regulated Claims Management Companies ASA means the Advertising Standards Authority CAP means the Committee of Advertising Practice Claims Management Regulator means the body appointed under statutory provisions (Part 2 of the Compensation Act 2006) to regulate the activities of businesses providing claims management services (currently the Ministry of Justice) CMC means Claims Management Company Code means the unified Code of Conduct for Financial Claims Management Companies as agreed by The Claims Standard Council The Association of 1

3 Professional Claims Managers and The Association of Regulated Claims Management Companies CSC means The Claims Standards Council DMA means the Direct Marketing Association ICO means the Information Commissioner s Office JCC means the Joint Conduct Committee JTB means the three trade bodies that have agreed this unified code, comprising of the CSC, APCM and ARC Members means member firms of one or other of the component trade bodies of the JTB MoJ means the Ministry of Justice OFCOM means the Office of Communications OFT means the Office of Fair Trading Requirements means the Requirements section of this Code of Conduct Sector means the claims management market SRA means the Solictors Regulation Authority TPS means the Telephone Preference Service 2

4 Part 1 Business Code of Conduct - Requirements 3

5 1. Administration of the Code The Code will be administered by the Joint Conduct Committee which is made up of the Chairman of the Claims Standards Council s Financial Services Group, the Chairman of the Association of Professional Claims Managers, the Chairman of the Association of Regulated Claims Management Companies and an Executive of one member firm from each trade body that forms the JTB. The Executive must be nominated annually by the members of the member firm s trade body. 2. Principles i. Members must comply with the requirements as well as the spirit of the Compensation Act 2006 and the MoJ Conduct of Authorised Persons Rules ii. iii. Members agree to abide by the requirements of the Code. Members actions must not risk bringing the JTB, its Members or the claims management sector into disrepute. iv. Members must ensure that their business activities meet the requirements of any legislation relevant to those activities. v. Members must act with honesty, integrity and professionalism. vi. Members must always consider the information needs of their customers and treat them fairly. vii. Members must ensure that all individuals and/or business entities working on its behalf have the necessary training and competence in order to carry out their duties. viii. Members must publish the Code or a link to the Code on their main business website in a prominent position and should make the Code available in alternative formats for example Braille, audio format or large print. 4

6 3. Staff Training & Monitoring i. Members must provide specific and ongoing training to its staff in relation to claims management and the various types of complaints and products which the Member makes claims for. ii. iii. iv. Members must ensure that all staff and business entities working on its behalf have a sound knowledge of their responsibilities under the Data Protection Act 1998 (see section 8 for further information). Members must monitor their staff, and in particular sales teams, on an ongoing basis to ensure compliance with the Code and conduct rules issued by the Claims Management Regulator. Records must be retained to evidence staff training and assessment. v. Members must ensure that disciplinary procedures are implemented to deal with employees who materially breach the Code in any significant way. 4. Marketing & Advertising Adherence to the Conduct of Authorised Persons Rules is required, and in particular the following rules are drawn to your attention: i. Members must ensure that all and any advertising materials used in the course of their marketing activities comply with the requirements of the CAP Code of Practice. ii. iii. iv. All marketing activities should comply with the requirements of the DMA Code of Practice. Members must use all reasonable endeavours to ensure that any marketing activities undertaken on their behalf by third parties comply with the Conduct of Authorised Persons Rules All advertising and information provided to a potential customer must be clear, fair and not misleading. v. Members must not engage in high pressure selling. vi. Members must ensure that bonus and incentive schemes are monitored to ensure that they do not give rise to inappropriate sales. vii. Members must not imply in advertising that the customer will have an increased chance of success through using the services of a CMC. 5

7 viii. Members must not imply in advertising or during telephone conversations that the customer is entering into a formal agreement prior to signing a written agreement. ix. Members must not imply that they are approved or work in conjunction with any Government body, regulator and/or enforcement body. x. Where business is introduced to a solicitor, the Member must not act in a way that puts the solicitor in breach of the rules governing solicitors conduct and specifically Chapters 8 and 9 of the Solicitors Regulation Authority (SRA) Code of Conduct xi. Where Members utilise introducers they must ensure that there is a written contractual agreement in place between the parties. The agreement must make adequate provision for the following: a. the introducer s responsibility to comply with the Member s procedures and this Code; b. the requirement for the introducer to be authorised, unless he is exempt; c. the requirement for the introducer to co-operate with the Member in the investigation of any complaints; and d. the Member s responsibilities for the compliance of the introducer. In addition, this Code provides that: xii. Members must ensure that their marketing activities comply with the MoJ s Guidance Note on Marketing & Advertising Claims Management Services 2007 (2008 as amended). xiii. Members must ensure that where they make referrals to solicitors, they do not breach or cause any such solicitors to breach the SRA Code of Conduct 2011 xiv. Members must ensure that their marketing activities comply with the requirements of the Privacy and Electronic Communications Regulations 2003 (2011 as amended). xv. Where a member is the subject of a complaint to the ASA, the Member must adhere to all requests for information from the ASA and any decision notice issued by them. xvi. Members must display their full terms and conditions of business and details of their fees on any websites which they own and operate without the requirement for the consumer to provide their personal data in order to obtain those terms and conditions and/or fees. 6

8 xvii. Members must not lead consumers to believe that their case can be fast-tracked through using their service. xviii. Members must provide the following additional information to potential customers verbally when making initial contact by telephone: a. Members must make clear to all prospective customers at the point of contact that they are members of one of the JTB and regulated by the Claims Management Regulator in respect of regulated claims management activities. b. Members must make clear in writing the fees which will be payable by the potential customer, how they are applied and to what they are applied. xix. Further information to be provided to potential customers in writing prior to entering into a written contract: c. Clear and objective written information (which could take the form of a Frequently Asked Questions leaflet) about the services to be provided and any significant information which the potential customer may need to assist them in making an informed decision about whether or not to use the services of the CMC. Key information which must be included are: i) If a Member charges a fee which incorporates an element based on compensation not paid in cash, details of how compensation is likely to be paid. ii) iii) iv) Details of the fees which will be payable. Confirmation of the fact that the potential customer has the right of a 14 days cooling off period from when they sign the agreement and details of any fees chargeable after this time has expired. Details of how the claim will be managed and, if a Member sets out any details as to how long the process takes, details of how long the process typically takes. v) Confirmation of the fact that the potential customer can choose to make a claim for compensation independently of a CMC. vi) Where applicable, a warning that an ongoing insurance policy may be cancelled in the event of a successful mis-selling claim in respect of that policy. vii) Details of the Member s complaints handling procedure (see Section 9 for further information). 7

9 viii) Details of how to obtain a copy of the Code. d. Where a Member receives fees by way of a percentage of an award, and/or receives part of the fees in advance of receipt of the compensation award, key information must be provided to potential customers who may receive compensation awards as a result of the services of the Member: ix) Information, which may take the form of a table, illustrating for three separate compensation awards, as specified below, the net fees that would be payable by the potential customer and confirming that VAT will be payable on those fees and the total fees inclusive of VAT, based on the prevailing specified rate of VAT: (A) a compensation award, within a range deemed by the JCC to be the average for that type of financial claim; (B) a compensation award that is half the amount of (A); (C) a compensation award that is twice the amount of (A); In the event that a Member charges a different rate of fee for differing amounts of compensation, the Member should provide instead of (B) and (C), such compensation award or awards in respect of which the Member would charge a fee on a different basis. Where a Member s fees also apply to compensation awards not made in cash, such as by way of loan reduction or future savings, a further example must be given, based on a total compensation award as (A) above, but illustrating the fees that would be due where half the compensation award was made in the form of cash and half made by means of loan reduction or future savings or reduced future payments. x) Confirmation in writing that the potential customer is responsible for the payment of such fees (if applicable). xi) If applicable, Members offering a No Win No Fee service must make clear to any potential customers that a fee may be payable in certain events other than a successful claim for compensation and refer the potential customer to the relevant clauses of the Member s terms and conditions e. The Member s terms and conditions of business in writing. 8

10 xx. Marketing Data: f. Members must only purchase data from reputable businesses which are appropriately authorised by the Claims Management Regulator. g. Members must operate an internal suppression file which all new data purchases must be screened against. h. Any data purchased must be screened against the relevant preference service file (e.g. TPS, MPS etc.) prior to use unless the necessary prior consent has been obtained from the individual consumer. i. Members must ensure that data suppliers have collected such permissions in the correct way (i.e. opt in and opt out). xxi. Telemarketing: j. Where members make use of an automated dialling system they should ensure that they comply with the requirements of the OFCOM Revised statement of policy on the persistent misuse of an electronic communications network or service In particular: i) Members abandoned call rates must not exceed 3% per campaign in every 24 hour period. ii) iii) iv) Where Members use Answering Machine Detection software; they should, when calculating their abandoned call ratio, make provision for any false positives. Where a call is abandoned (excluding silent calls) a message should be played which identifies the Member and provides either a free phone telephone number, a basic rate 0845 number or an 01, 02 or 03 number which consumers can call back on. The message should not be used as an opportunity to market. Where a call has been abandoned, a further call may not be made to the same telephone number within a 72 hour period unless the presence of an agent is guaranteed. v) Members must make use of a presentation number when dialing out. xxii. Marketing: k. Members must make it easy for consumers to opt out of receiving marketing communications with a simple link contained within the . 9

11 xxiii. SMS Marketing: l. Members must make it easy for consumers to opt out of marketing communications via SMS with simple instructions contained within the SMS. xxiv. Doorstep Marketing m. Members are forbidden from doorstep marketing. n. Members may visit a potential customer s home as long as the necessary prior consent has been obtained (e.g. appointment making via telephone). xxv. Direct Mail Marketing o. Members must make it easy for consumers to opt out of marketing communications via direct mail with simple instructions contained within the mailing or a return slip. 5. Investigating, Submitting & Managing Claims for Compensation Adherence to the Conduct of Authorised Persons Rules is required, and in particular the following rules are drawn to your attention: i. Members must only advise potential customers to pursue a claim for compensation if the service being offered meets their needs and it is in their best interests to do so. ii. iii. iv. Members must only advise potential customers with valid grounds for complaint to pursue a claim for compensation. Members must handle all communications from the defendant party without delay and inform the customer of any key matters affecting the claim including the final outcome. Members must pass on all information provided by the customer to the defendant party without delay if instructed to do so or where it is relevant to the claim. v. Members must assist customers throughout the claims process and in particular assist them in filling in any forms or questionnaires. Members should take care to ensure that they do not lead the customer in their answers in order to maximise the chances of any compensation payment. 10

12 In addition, this Code provides that: vi. Members must carry out a reasonable fact find with potential customers as to the cause of their complaint prior to entering into an agreement. vii. Members are permitted to submit claims for compensation during the 14 days cooling off period provided that they do not attempt to make any charge to the customer should the customer terminate the agreement within this period even if compensation has been awarded. viii. Members must not submit claims for compensation in respect of a product or service unless the Member has verified evidence that the customer has or had that product or service that is the subject of the claim. ix. Members must act professionally in their dealings with defendant parties and any recognised dispute resolution service such as the Financial Ombudsman Service. x. Members must keep sufficient records on individual claims and keep these for a minimum of six (6) years and in compliance with the Data Protection Act Handing Client Money i. Members are not allowed to bank client money unless: a) they have advised the Claims Management Regulator that they handle money; b) they are fully compliant with the MoJ Client Account Rules ii. Member firms must check, as far as is reasonably possible, that the redress offered complies with the principles of the Financial Ombudsman Services, Financial Services Authority or Financial Services Compensation Scheme and challenge any discrepancies with the financial instritution concerned before recommending an offer to the customer. iii. Members must ensure that redress offers and redress payments are passed to the customer in a timely manner and should not be accepted without the prior consent of the customer. 11

13 7. Fees & Charges Adherence to the Conduct of Authorised Persons Rules is required, and in particular the following rules are drawn to your attention: i. Members are required to promptly notify the customer immediately of any chargeable unforeseen disbursements which may arise during the claim for compensation which they are expected to meet (e.g. data subject access request fee). In addition, this Code provides that: ii. iii. iv. When deciding what level of fees to apply to their service, Members must ensure that the fees are transparent and reasonable in light of the service being offered. Members are permitted to make an hourly charge should the customer decide to terminate their agreement after the 14 days cooling off period, provided that the hourly rate was stated within contractual agreement with the customer. However, these fees should reflect the actual costs incurred by the business. Members will be required to keep a record and evidence to justify the calculation of their termination fees (see section 7 for further information). Members are not permitted to charge any form of upfront fee or similar charge. v. Where Members charge fees on elements of compensation based on future savings, Members must ensure that fees calculated on such elements are proportional to the cash compensation award received and that payment by the customer of such fees based on future savings will not place the customer in financial hardship. 8. Collections i. Member firms are entitled and expected to recover the fees due to them for work undertaken on the customer s behalf. ii. iii. iv. Only fees and charges which are included within the Member s terms of business may be applied. Members collection procedures should be fair and reasonable. Member firms should give consideration to alternative payment arrangements where the customer cannot pay the fee. This includes taking account of any financial difficulties experienced by the customer and considering a reasonable offer to pay by instalments. 12

14 v. Legal action should only be taken when other options have been considered. vi. A customer s debit or credit card details must not be used to collect fees without the informed prior consent of the customer. vii. Prior notice should be provided to the customer before attempting to use the card for payment or partial payment of fees. viii. Where a Member decides to transfer debts to a Debt Collection Agency it must ensure that the firm holds a Consumer Credit Licence which includes the debt collection category. 9. Contracts & Termination Adherence to the Conduct of Authorised Persons Rules is required, and in particular the following rules are drawn to your attention: i. Members must ensure that their contracts comply with the Unfair Terms in Consumer Contracts Regulations ii. iii. Members must allow consumers to withdraw from a contract at any time. Members contracts must contain details about the charges that will be made in the event of a successful claim and in the event of termination and in which circumstances such termination fees will be charged. In addition, this Code provides that: iv. Contractual arrangements with consumers must always be in writing and evidenced by the customers signature and duly dated. v. Members must have contracts which are written in a manner which is easy for consumers to understand. vi. Vii Members contracts should be set out in a way that is easy for the customer to navigate around. Members terms of business must not require the customer to provide any more than 1 month s notice to cancel the contract after the initial 14 day cancellation period. viii. Subject to the 14 days cooling off period, where a business wishes to charge for any reasonable costs which they have incurred; they must provide a breakdown to the customer of how the termination fee has been calculated. This should be in the form of a schedule of costs which sets out tasks undertaken, time taken to do these tasks and hourly rate charged up to a maximum of 50/hour. Termination fees should not exceed 500 per claim. 13

15 ix. The aforementioned cooling off period will take effect from the date that the contractual agreement was signed by the customer. Members must not charge a termination fee where the customer has been adjudicated bankrupt or entered into an IVA. x. Members must not charge a termination fee where an offer of compensation has been made but not accepted if accepting such an offer would not be in the best interests of the client (e.g. if accepting an offer would mean that the customer will be financially worse off). xi. Members must be alert to instances where customers may have specific difficulties, for example, if English is not their first language, if there are reading difficulties, or the customer has a mental capacity difficulty. Members must deal with such cases appropriately and sympathetically and make reasonable adjustments to deliver a service which is accessible for the customer. 10. Data Protection i. Members must comply with the provisions of the Data Protection Act ii. iii. Members must instil a culture of data protection within their organisation on all levels at the business. Members must ensure that they have a robust data protection policy which is available to all members of staff, particularly in respect of data obtained through data subject access requests. The policy must be made available to all customers if requested. Members must carry out regular audits to ensure their systems and controls are robust and fit for purpose. 11. Complaints & Redress i. Members must comply with the MoJ s Complaints Handling Rules ii. Members must operate a robust complaints handling procedure which must be readily available to all customers and make provision for: a. The submission of complaints by whatever reasonable means. b. The procedure for how the complaint will be investigated. 14

16 c. What the customer can do if they remain dissatisfied once receiving the Member s response. iii. iv. Members must publish their complaints process on any websites owned or operated by them and make reference to them within their precontract information or terms of business. Members must ensure that any employee handling complaints is independent and unconnected to the case and has the necessary ability and resources in order to handle such complaints in an effective, unbiased and timely manner. v. Upon receipt of a complaint, Members must acknowledge it within 5 business days naming the person and position of the individual who will be handling their complaint as well as providing their contact details. vi. If the Member is unable to issue a final response within 28 days of receiving the complaint, then they should write to the complainant explaining the delay and when they can expect to receive a response from them. vii. If after 56 days of receiving the complaint the Member is still unable to provide a response to the complainant, they should write to the complainant explaining what is causing the delay and when they can expect to receive a final response. This communication should also inform the complainant of their right to refer their complaint to the Claims Management Regulator if they are dissatisfied with the handling of their complaint. viii. Once the Member is in a position to provide a final response, they should write to the customer titling the letter Final Response and providing full and frank answers to the complaint(s) raised. The letter must also inform the complainant of their right to refer their complaint to the Ministry of Justice should they remain dissatisfied with the Member s response. If the business intends to: d. Reject the complaint, they must make this clear in their response but remain professional at all times and provide sufficient evidence to the customer to back up their response. e. Uphold the complaint, they must make this clear in their response and offer to settle matters in an appropriate manner for the complainant. ix. If a Member chooses to uphold a complaint, monetary redress is not necessarily required on all occasions; it may involve a simple apology, an offer to redo the work or refund the fee. But where a business decides that redress is appropriate, a business must provide the customer with fair compensation for any acts or omission for which it was responsible. 15

17 Where an offer of redress is accepted by the complainant, the Member is bound by this acceptance and must make a payment or make an alteration to the customer s account within 5 business days. x. Members may approach the complainant for further information to assist in their investigations but must not use it as a tool to delay the investigation or intimidate the complainant. xi. Members must take into account the customer s perspective and must not rely solely on compliance with the rules in place at the time or the provision of certain information in writing or verbally. xii. Members may decline to consider a complaint where the action which has caused the complaint took place over six (6) months previously. xiii. Members must take account of the causes of complaints and take timely action to address any recurring issues or common problems in order to prevent further customers being at risk. xiv. Members must provide complaints data to its trade body within the JTB on at least an annual basis. 12. Compliance, Monitoring & Disciplinary i. Members must use all reasonable endeavours to comply with the Code. ii. iii. Members will submit a compliance statement to the JTB prior to each renewal of their membership their respective trade body.. Members must co-operate with any reasonable request from the JTB to enable it to monitor and implement this code. iv. Members must notify the JTB of any material breach of the Code. A breach will be material if it affects a large number of customers or a significant process has considerable financial implications for the firm or is likely to attract adverse attention, publicity or reputational damage to the Member or the JTB. v. In the event that there is prima facie evidence that a Member is failing to comply with the Code, the JCC will notify the Member in writing confirming the alleged conduct breaches and asking them to rectify them or provide evidence to the contrary of the allegations. vi. In the event that a Member continually fails to comply with the Code, the JCC will issue a written warning notice to the Member notifying them that if their conduct continues that their membership may be cancelled. The notice will also request that the alleged conduct breaches be rectified 16

18 within a reasonable timescale commensurate with the nature of the alleged conduct or evidence be provided to the contrary of the allegations. vii. In the event that a Member ignores a warning notice and still continues to disregard the Code beyond the timescale stipulated within the Notice, the JCC will notify the Member that their membership has been withdrawn. viii. Members will have the opportunity to appeal any notices throughout the disciplinary process by writing to the JCC within 14 days of receiving the notice. ix. The JCC will decide upon any appeal made to it. x. The JCC reserves the right to publish its disciplinary decisions in the public domain relating to the termination of membership subject to any appeals pending. xi. The JCC may stipulate, that as an alternative to loss of membership, regular compliance audits are undertaken on the member s business. xii. Any audit will be carried out by an independent party decided upon from time to time by the JTB. xiii. Audit costs will be met by the Member and paid in advance. Members must adhere to any direction given following such an audit. xiv. Members may be subject to ongoing monitoring such as mystery shopping. xv. Members must notify the JCC within 5 business days of becoming aware of the likelihood of any disciplinary, licensing, authorisation or enforcement action being taken by the Claims Management Regulator, the Office of Fair Trading, the Information Commissioner or any other regulatory body. xvi. Members must keep the JTB informed about the progress and outcome of any such action. 17

19 Part 2 Business Code of Conduct Best Practice 18

20 Introduction This section deals specifically with areas of best practice that Members may wish to adopt to demonstrate their further commitment to their customers and compliance. The JTB encourage its members to work towards the best practice guidelines laid down in this section of the Code. 1. Marketing & Advertising i. Members should provide the following information (as well as that listed at 4(xviii) of the Requirements) to the customer when making initial contact: a. Confirmation of their right to make a claim independently of a CMC. b. Any risks associated with making a claim for compensation. ii. Where relevant, Members should carry out due diligence checks on data suppliers prior to the purchase of such data. iii. Members should record all telephone communications. iv. Where a Member makes initial contact with such an individual and decides that they cannot assist them due to their financial circumstances, they should suggest a not-for-profit organisation (such as the Citizens Advice Bureaux) may be more suitable in their individual circumstances whilst making clear that their financial difficulties do not affect the specific merit of their complaint. 2. Fees Members should only apply fees to cash elements of compensation awards and not to elements of compensation represented by loan reductions or future savings. 3. Audit i. Members will undergo an audit every year on their compliance with the Code. ii. The audit must be carried out by an independent party approved from time to time by the JTB(such approval not to be unreasonably withheld). 19

21 iii. iv. Audit costs must be met by the Member. Members must adhere to any reasonable direction given following such an audit. 4. Termination The JTB considers it best practice for Members to take into account the customers reasons for terminating their agreement when deciding whether or not to charge a termination fee. 5. Complaints Members should allow complainants further time to bring their complaint than that provided for under Section 10 of the Complaints Handling Rules 2006: i. Members may decline to consider a complaint where the action which has caused the complaint took place over six (6) years previously. ii. If the complainant could not have been reasonably aware of the cause for complaint six (6) years previously then the Member must review the complaint on the condition that the complainant has brought their complaint within three (3) years of being reasonably aware of the issue. 6. Contracts Pre-contract information and terms and conditions should be made available in alternative formats, upon request, to cater for specific customer needs, for example, Braille, audio format, large print and other languages. 20

22 Part 3 Member Charter 21

23 The Unified Code of Conduct for Financial Claims Management Companies Member Charter You have chosen a firm to manage your claim for compensation that is a member of one of the three trade bodies that has agreed this Code of Conduct - but what does this mean? The unified Code of Conduct for Financial Claims Management Companies has been sponsored by 3 trade bodies which were set up to improve practices in the claims management industry and are completely independent of the Government and regulators. The Ministry of Justice is currently the Claims Management Regulator that regulates all claims management businesses and our members are required to comply with their rules. However, we also have a set of standards which our members must adhere to and these require them to go further than what the regulator expects of them this means that you will receive the best service possible. Our members promise to: 1. Treat you fairly at all times. 2. Act with honesty, integrity, fairness and professionalism. 3. Provide you with information which is clear and understandable. 4. Provide you with all the information you need to make an informed choice about their service. 5. Manage your claim with skill and care. 6. Inform you immediately of any important turning points during your claim. 7. Keep your personal information secure. What our members ask of you: 1. Be honest and open with them at all times about your claim. 2. Read any information they send you carefully and ask if you don t understand anything. 3. Provide any information and evidence which is necessary for and supports your claim. 22

24 What can you do if you re unhappy with our member? Even the best of businesses sometimes don t get it right and we hope that you don t have to make a complaint about one of our members. However, if you are unhappy about any aspect of their service, you should complain to them first they will have given you information about how you can do this already. If you are dissatisfied with the response given by one of our Members in respect of a complaint you have made, please contact the Joint Trade Body support team on