Firms which make unsolicited calls about personal injury and mis-sold payment protection insurance (PPI) claims will face large fines under new laws.

Tough new rules are being introduced by the government to crack down on rogue firms responsible for bombarding the public with misleading advertising and flooding banks with unsubstantiated claims for compensation.

To ensure that the claims management industry delivers the best possible results for consumers, the Claims Management Regulation (CMR) Unit at the Ministry of Justice will also be expanded with more enforcement staff.

Government action has already seen the number of claims firms operating drop by more than 1,000 since a peak of 3,400 in 2011 to 2,300 now.

The fines will be used to make sure that those which remain in the industry follow the rules – and that they pay for it when they do not.

Justice Minister Shailesh Vara said: “We will not tolerate companies which waste hardworking people’s time and money through their own laziness, incompetence or frankly dubious practices.

“We are already making sure rogue companies are shut down – and now we are ensuring those who are wasting everyone’s time will pay for it.”

Financial Secretary to the Treasury, Sajid Javid said: “These new rules will put PPI claims pests in their place.

“Cold call companies that bother the public will now have one less reason to do so.

“This will also help free up the banks to pay legitimate claims more quickly.”

The fines will be brought in as part of law changes being made through the Financial Services (Banking Reform) Bill which is currently progressing through Parliament.

They are expected to take effect next year, when further details on the maximum fine levels will be published.