17-year bans for claims management bosses after breaching regulations
This article was originally produced by the Insolvency Service and was published on 10th April 2018. The original version of the article can be found by clicking here.
Clifford Martin Stanford has been disqualified from acting as a director for 11 years for his conduct as director of Cerys-Angharad Ltd (Cerys) and Ifonic Plc (Ifonic).
And Timothy Mark Schubert has also been disqualified from acting as a director for 6 years in relation to his conduct as a director of Ifonic.
The order disqualifying the directors was made in the High Court on 27 November 2017 by Deputy Registrar Kyriakides.
The Insolvency Service found that members of the public had complained to Trading Standards and the Ministry of Justice (MOJ) about Cerys, which resulted in the MOJ conducting an investigation into the company’s claims management procedures.
It was found that Cerys engaged in unfair trading practices in breach of the Conduct of Authorised Persons Rules 2006 and 2013 (“COAPRs”) and had failed to comply with the Compensation (Claims Management Services) Regulations 2006.
Cerys misled the public in sales calls regarding claims services offered, fees charged and cancellations. Services paid for by customers were not provided and fees were deducted from customers without their authorisation. Customers also complained of Cerys’ failure to issue a refund of up-front fees paid.
Despite the MOJ issuing warnings, the company failed to rectify the breaches, resulting in Cerys voluntarily surrendering its authorisation to provide claims management services.
The Insolvency Service then looked into the activities of Ifonic and found that following the closure of Cerys in March 2014, Ifonic acquired over 4,000 of Cerys’ existing clients and promised to honor the terms and conditions of their contracts including an assurance that all those due a refund of fees would be paid. Ifonic also entered a number of contracts with new clients.
However, existing and new clients of Ifonic experienced similar problems to those at Cerys and submitted complaints to the Legal Ombudsman and the MOJ.
The complaints received included claims that Ifonic provided misleading information in sales calls, had failed to address complaints and provide the service customers had paid for, taken unauthorised payments from customers and failed to issue refunds of up-front fees to customers who had cancelled their contracts within the cooling-off period.
The Insolvency Service found that similar to Cerys, Ifonic engaged in unfair trading practices in breach of the Conduct of Authorised Persons Rules 2013 and 2014 (“COAPRs”) and therefore failed to comply with the Compensation (Claims Management Services) Regulations 2006.
Despite the MOJ issuing warnings, Ifonic failed to rectify the breaches, resulting in Ifonic voluntarily surrendering its authorisation to provide claims management services.
Robert Clarke, Investigations Group Leader at the Insolvency Service said:
The Compensation (Claims Management Services) Regulations 2006 provide protection to the general public from unfair sales techniques by agents for companies operating within the claims management sector.
When company directors do not comply with legislation that is designed to protect customers and avoidable losses result, the Insolvency Service will seek lengthy periods of disqualification.
This should serve as a warning to other directors who may feel tempted to breach customer protection legislation. The Insolvency Service will rigorously pursue directors who deliberately mislead and breach the trust of customers.
The Insolvency Service is grateful for the assistance provided by The Ministry of Justice, Trading Standards and The Legal Ombudsman in achieving this outcome.