Claims management companies banned.
Four claims-management companies have been banned from operating in a Government bid to protect the public from exploitation by rogue operators.
Claimwise Legal Services and Momentum Network have had their authorisations cancelled, while GloVista Red and Ezee Claims have been suspended.
Damages-based contingency fee agreements, generally used in employment tribunals, were previously free to charge what they wished before regulation was introduced in 2007.
Says justice secretary Jack Straw: "Unregulated contingency-fee arrangements expose claimants to unfair terms and conditions being imposed by those representing them, which could lead to huge slices being taken out of their damages.
"These arrangements - unlike, for example, conditional fee agreements - have until now been without statutory regulation because of a long-standing legal anomaly."
New proposals yet to be implemented aim to make sure consumers know, before they sign anything, how much any claim is likely to cost.
Says Carl Wright, boss of claims management company Cartel Client Review: "Consumers must be very wary of firms that make misleading claims of buying up debt. It may appear an attractive notion, but their lack of legal experience with unenforceable credit agreements will only leave consumers in deeper financial trouble, and potentially even in court."
Article taken from Claims Management magazine issue 20