Regulation

U.K. government to fine PPI claims firms for unsolicited calls, texts

125px-Flag_of_the_United_Kingdom.svgThe U.K. government recently announced legislative changes that would result in heavy fines for payment protection insurance claims firms that use information gathered through unsolicited calls and texts and provide poor quality services.

As part of a government crackdown on firms that put out misleading advertising and unsubstantiated claims, a new clause has been inserted into the Banking Reform Bill, making it illegal to exploit information obtained through cold calling, even if the claim is genuine, The Guardian reports.

Firms will still be allowed to contact potential customers using advertising, as long as it meets standards established by the Claims Management Regulator.

The Ministry of Justice said the effort has already led to a significant reduction in the number of firms—2,300, compared to 3,400 in 2011, according to The Guardian.

“These new rules will put PPI claims pests in their place,” Sajid Javid, the financial secretary to the U.K. Treasury, said. “Cold call companies that bother the public will now have one less reason to do so. This will also help free up the banks to pay legitimate claims more quickly.”

The new rules will take effect next year, and the maximum fine will be reviewed before it becomes permanent, The Guardian reports.

Banks have said some of the 1,100 claims companies that currently specialize in helping consumers make claims for compensation over financial products are responsible for flooding banks with inaccurate and incomplete claims that have led to unnecessary costs and delays in resolving genuine claims.

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