Claims drain as MoJ axes 38 firms in 2010

More financial claims management firms have had their permissions cancelled this year than in the whole of 2009.

A total of 38 firms have had their authorisation cancelled, with three being suspended by the Ministry of Justice. Just 34 claims companies had their authorisation cancelled during 2009.

The Ministry of Justice refused to comment on the figures.

But Robert Sinclair, director of the Association of Mortgage Intermediaries, says: “Clearly, a number of these firms were hanging on in the hope that the bank charges issue would come to fruition and they could make a living off that, but it didn’t.

“Also, a significant number of them have claims sitting at the Financial Ombudsman Service regarding payment protection insurance and this has caused them cash flow problems.”

He adds: “There was a flurry of new entrants that found there wasn’t the opportunity in the market they imagined. Ultimately, nobody needs a claims management firm – they can go directly to the FOS.”

The most high-profile firm to lose its authorisation this year is Cartel Client Review, which was suspended by the MoJ in March and placed into compulsory liquidation at the Royal Courts of Justice in June.

Financial claims management firms appeal to the FOS on behalf of customers who feel they have been treated unfairly.