Intelligence gathered by Claims Management Regulator (CMR) officers revealed that Preston-based Allsure Ltd had encouraged holiday-makers to “fabricate or embellish symptoms of gastric illness to get compensation”.

Further evidence showed the firm had used deceptive sales scripts, exaggerating expected payouts to entice consumers, the Ministry of Justice (MoJ) reported.

Allsure Ltd can no longer offer regulated claims management services to new or existing clients and an MoJ spokesperson said this was the first time a licence had been revoked from a claims management company (CMC) in the “holiday sickness sector”.

Kevin Rousell, head of the CMR, added: “We will take firm action against claims businesses which engage in serious misconduct.”

It comes in the same week Abta told TTG it is seeking a ban on solicitors and claims firms partaking in cold calling, in the hope it will prevent prospective clients being “lured” into making false claims.

Since 2013, there has been more than a 500% increase in the number of compensation claims for holiday sickness by British holidaymakers, and in June the association launched a campaign entitled Stop Sickness Scams, calling on the government to crack down on fake holiday illness claims.

In early July, the government committed to urgently addressing a loophole in the law which allows companies to profit unduly from false claims.

Abta said it would continue to work closely with the government and regulators to encourage further reforms, including supporting amendments to the Financial Guidance and Claims Bill, which is next being debated in the House of Lords in September.

The association is supporting amendments that would ban cold calling, stating that it is “seeing evidence” that this is a growing practice for CMCs. Alan Wardle, director of public affairs for Abta, told TTG: “Solicitors are currently banned from making unsolicited calls and should not pursue claims that are the result of cold-calling activity, but existing laws make detection of breaches and enforcement of rules difficult.

“Abta believes it is wrong for companies to cold call people and encourage them to make compensation claims that cannot be justified, whether for PPI, whiplash or holiday sickness.

“We know that people dislike these calls and are being lured into making false claims. We are therefore urging the government to take action and include in the bill amendments that would ban cold calling.”

Meanwhile, Abta has reiterated its call for “returning holidaymakers” to beware of the implication of making fake sickness claims.

TTG could not reach Allsure Ltd for comment.