MARCH OF COLD CALL COWBOYS
Nuisance call fears as rogue claims firms relocate to Scotland
AN influx of cold-calling companies have set up in Scotland and are bombarding people with nuisance messages.
A number of firms have opened north of the Border to inundate families with calls and texts about their personal injury history after a change in the law in England made it more lucrative to operate here.
Once they obtain the details of customers who have had an accident, they can sell these for hundreds of pounds to ‘no win, no fee’ legal firms.
Over two and a half years, 18 new ‘claims management companies’ have set up in Scotland, according to an analysis of Companies House documents by a leading law firm.
But it is estimated that many more ‘rogue’ firms will have relocated here without formally registering.
It means customers could face the double whammy of more nuisance calls and texts and an increase in insurance premiums as a result of rising claims.
The influx has sparked fears that not
enough action has been taken in Scotland to crack down on cold-calling.
The Scottish Government is being urged to introduce tighter regulations, ban referral fees paid to the firms by lawyers and crack down on exorbitant legal fees.
Official figures show that, since 2011, the volume of compensation claims has soared by 6.9 per cent in Scotland but reduced by 12.5 per cent in England.
Alastair Ross, head of public policy for Scotland at the Association of British Insurers, said: ‘Signs of rogue claims management companies moving into Scotland is worrying, given how their activities end up being paid for by honest motorists through their insurance premiums.
‘We need to see regulations that “follow the money” behind the nuisance calls that try to generate whiplash and other compensation claims.
‘That means a ban on lawyers paying claims management companies for people’s claims information.’
Claims management companies buy listed data on individuals and call them to find out if they are eligible to submit a compensation claim.
Once they get an individual’s details, they can sell them in Scotland to specialist law firms, often for several hundred pounds.
These ‘referral fees’ are no longer allowed in England after being banned in the Legal Aid, Sentencing and Punishment of Offenders Act 2012.
Further regulation has been brought in by England and Wales but there is a gap before the firms are regulated by the Financial Conduct Authority in Scotland next year.
Andrew Lothian, a partner at legal firm DWF in Scotland, said 18 firms had set up here and registered at Companies House in the past two and a half years – but warned many more less reputable operators are likely to have moved, too.
He said they will be fuelling a growing compensation culture, with consumer group Which? estimating that Scotland has a bigger problem with cold calls per head of population than other parts of the UK.
Mr Lothian said: ‘While insurance premiums are calculated partly by your claims history, they are also linked to the risk of a claim in the future. If there is a rising tide it lifts all ships and costs as a whole increase – that is going to have an impact on premiums as a whole.’
He appealed to the Scottish Government for more regulation of the sector, and to take action on referral fees and disproportionate legal costs during compensation cases, which he said are ‘out of kilter’ with the rest of the UK.
Figures from the Department for Work and Pensions show that between 2011-12 and 2015-16 the number of claims registered in Scotland increased from 44,685 to 47,762. Over the same period, there was a reduction from 939,785 to 822,329 in England.
Scottish Conservative chief whip Maurice Golden said: ‘Nuisance calls are a blight on society, so it’s worrying to see an increasing number of them. We need to put an end to them. Any action we can take to spare Scots from these needless calls should be looked at.’
Nick Baxter, chairman of the Professional Financial Claims Association, said Scots firms will soon be regulated by the UK-wide Financial Conduct Authority, while referral fees within the financial sector are ‘strictly’ controlled.
He added: ‘Companies that call out to customers are extensively regulated: they must comply with rules already in place and of course GDPR [General Data Protection Regulation] tightens up the rules.
‘I don’t think cold-calling from professional, wellregulated firms was ever a problem, it was more the rogue end of the market.’
A Scottish Government spokesman said: ‘Regulation of nuisance calls and texts – including the question of “punitive action” – is reserved to the UK Government, which is responsible for taking action.
‘We established the Nuisance Calls Commission to find practical solutions that could better protect our most vulnerable citizens.
‘We have already provided £125,000 to enable over 1,200 vulnerable people to access call blockers to prevent unwanted calls, and we will continue to work with key partners to deliver our action plan and reduce nuisance calls for people across Scotland.’
Comment – Page 16
‘Cold calls are a blight on society’