The regulator of claims management companies has reported a massive rise in the number of businesses refused authorisation.

The Claims Management Regulation Unit warned there would be ‘no let-up’ in the coming year after seeing enforcement measures against firms leap from 35 in 2009/10 to 349 in 2010/11.

The sector has been blamed in recent months for a burgeoning compensation culture, and the unit’s head Kevin Rousell said the tone against claims management companies was now ‘far less forgiving’.

The regulation unit received around 13,000 complaints in the space of a year, the vast majority involving financial products and services, and most relating to cold calling and/or taking up-front fees over the phone.

But public unease has failed to dampen financial growth of the CMCs, with a reported turnover of £581m in the 12 months to the end of November 2010, £377m of which was from the personal injury sector.

The majority of new entrants to the sector are in personal injury, with a quarter of all companies based in the north-west of England.

Writing in the regulation unit’s end-of-year report, Rousell said enforcement action had been taken against companies involved in fraud, scams, unsolicited e-marketing and misleading use of the Ministry of Justice name on websites and brochures.

As well as those existing companies that have had their authorisation cancelled, nine applications have been refused to new businesses and 186 businesses withdrew their application before a decision was made.

By the end of March 2011 there were a total of 3,213 authorised businesses.

In the coming year, the regulation unit has made it a priority to tackle unsolicited text marketing and misleading advertising.

There will also be additional focus on unauthorised trading, fraud and staged accidents, fair dealings with clients and protecting client money.

‘There will be no let-up in 2011/12,’ said Rousell. ‘CMCs should remain in no doubt that those which breach the consumer protection requirements placed on them will be subject to investigation and firm enforcement action.’