New clampdown on "Have you had an accident?" claims firms

From April 1 new rules kicked in to try and stop malpractice from claims management firms - and this time it's no laughing matter.

The Financial Conduct Authority took control of regulating the industry - after complaints from customers and businesses about how the companies are run.

As a result more than 900 firms have been given "temporary permission" to trade as the regulator goes through their books with a fine-toothed comb.

“There will be no fooling the regulator once they’ve had the chance to run their rule over the companies that have displayed poor conduct when luring honest motorists into their clutches," said Martin Milliner who is claims director at LV= General Insurance.

The new rules

You just got the power to report them and could even get them banned (Getty Images/Cultura RF)

While the regulator acknowledges that there are cases when these firms help people get compensation they deserve and might otherwise miss out on, there were worries about how some go about it.

Companies were not always clear on what they were charging, as well as encouraging people to make shaky claims with the promise of big payouts - which the firm would then take a cut of.

The FCA's Jonathan Davidson said: "Many Claims Management Companies play an important role in helping to secure compensation for customers, including for those who otherwise might not make a claim.

"The new regime has consumer protection and CMC professionalism at its heart. It will mean that customers will be protected from claims management cowboys and get a better deal."

Firms will have to be far more up front about their charges - and let you know how to claim free too (Getty Images)

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New FCA requirements include:

• Due diligence on lead generation and rules to prevent firms encouraging customers to make fraudulent, frivolous or vexatious claims or claims which have no good basis

• Providing clear, upfront information to customers about the fees they charge and the services they will provide

• Giving customers a summary document about the services they will provide before the customer signs a contract

• Telling customers about free alternatives such as the Financial Ombudsman Service (FOS) or the Financial Services Compensation Scheme (FSCS), including in advertising

• Recording and retaining customer telephone calls for a year after their final contact with a customer will reduce the chances of high pressure sales techniques and support robust resolution of customer complaints

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If firms fail to live up to this the FCA can require them to change their business practices (for example ensuring communications with consumers are clear, fair and not misleading), impose fines or refusing to authorise a firm outright if there is serious misconduct.

And that means you can now take direct action against the spammers and the rip off merchants.

You can check to see if a claims firm is registered here and find out how to make a complaint here .

LV='s Milliner said: "We’d encourage consumers to report to the FCA any spam email, calls or texts from a company that isn't authorised."

If you're thinking about using a CMC, the FCA has produced this guide with information about how to claim compensation (including for free yourself), what to expect from a CMC if you decide to use one, and how to check you are using an authorised CMC.