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Categories:Advisers,Other

The Ministry of Justice is failing IFAs over claims chasers

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How effective is the Ministry of Justice? We live in an age where a whole industry of complaint-handlers - or instigators as they are known at Highclere - seek to extract every last penny out of whichever unfortunate they select as a victim. In this vile endeavour, truth and veracity are the first victims.

Some years back, an instigator levelled a series of fictitious allegations on behalf of a client. Investigations quickly showed that the client was oblivious to these defamations and had simply signed a piece of paper giving authority to investigate the sale. The client’s complaint was retracted and my subsequent application to the fraud squad resulted in little other than a crime number.

I recently received another complaint letter from the same company. Like the previous effort, it came via the insur-ance company. The letter alleged that the salesperson had failed to establish attitude to risk and argued that prior to the arrangement of a mortgage endowment, the client had no investment experience other than bank and building society accounts. It further contended that other repayment methods had not been fully discussed and the policy terms were inconsistent with the mortgage terms.

I found the letter shocking as this was a client of 25 years standing who, only months previously, I had assisted in switching from endowment to repayment.

Perhaps he had been energised by some newspaper article, automated phone call or door-knocker, so, with a degree of trepidation, I approached him and asked why he was complaining.

He assured me he had not levelled any complaint and was very happy with my advice. I read out the allegations and he was astounded as he had not made a single one. He had merely signed a piece of paper enabling the instigators to approach the insurer - can you see a trend here? He had been told the insurer would foot the bill for any errors and had been specifically assured I would not be approached. Had he known the process, he would never have signed the authority. I reminded him that prior to his endowments, he had operated a unit-linked pension mortgage and we had discussed the transition to and from endowments in great detail, all of which he accepted. As a consequence, he has now instructed the instigators to withdraw the allegations.

This begs a number of questions, the most important being - how is a firm regulated by the MoJ able to engage in duplicity and deceit in order that “redress” can be squeezed from innocent firms? I wiould consider this to be fraud and, from my experience, it seems to be fraud on an enormous scale.

The MoJ requires licensed firms to conduct business “with honesty, integrity and responsibility”.

Isn’t concocting complaint letters a breach of all three precepts? My letter to the MoJ will explain as much.

How many advisers and insurers have been targeted by these and other parasitic instigators? How many rejected claims ended up with the Financial Ombudsman Service, where at best they incurred a case fee and at worst involved a compensation payment due to the infamous FOS natural justice?

Alan Lakey is partner at Highclere Financial Services

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Readers' comments (26)

  • Pensions, Whole of Life, Endowments.....scandal after scandal after scandal. We need more MOJ regulated firms in my opinion. The whole 'advice' industry has got away with murder over the last 30 years or so and now its payback time.

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  • People in the UK are allowed to question any advice they receive and with millions being paid out it shows the financial services industry has a problem. Ambulance chases would not be around if there was not a problem in the industry. The FSA needs to look very closely at the finance industry and offer better protection to clients.

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  • Good luck with your letter, Alan; I am just taking a bet with myself that, should you receive a reply it will be either Kafkaesque or Orwellian :)

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  • I don't think Greg read the article and has clearly had his fingers burnt. Do you really think false and vexatious compliants are a good thing?

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  • Alan

    You are not alone and funnily enough the complaint we received was about exactly the same issues.

    In our particular case our first time buyer with no previous investment experience was on his third house with an endowment mortage and an investment portfolio he had held for over 10 years!!

    The only ray of light is that most of them are too incompetent to put forward a meaningful case, but that doesn't stop us having to waste time addressing non existent issues.

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  • All too true Alan, we actually had a policy clawed back at a previous firm I was involved with because another MoJ firm had obtained authority to reclaim PPI from an LV= MLP product... From a client who had also rated us as full marks on the TCF questionnaire we sent in the post following the sale!

    Even more infuriating, our network instructed us to under no circumstances to approach the client, meaning it was never truly followed up in the correct manner, now the client does not have the appropriate protection in place!

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  • Interesting comment Greg. What do you do for a living?

    I agree some bad advice has been given but there are alot good advisers that have done a good job for their clients who are now working in fear of reprisal for what was considered good advice at the time.

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  • Greg Williams and 'Anonymous' - that may be, but as the article refers to ' who polices Claims Chasers'?

    There are already reports of unethical Claim Chasers hiding their fees or just not doing anything to support their 'clients'.

    But on top of this - it seem far too many Claim Management companies (CMC's) are prepared to commit fraud in an attempt to gain money for themsevels/their clients.

    If the CMC's actually assessed clients fairly and gave appropriate advice on what should or shouldn't be persued, they would get alot more support from the Financial Services industry - i.e. allow us to allocate resouces to ensure thosei individuals given poor advice do get compensated - rather than having to waid through fraudulent claim after fraudulent claim to find the one that was missold.

    So, I welcome a stronger MoJ doing it's job and professional CMC's helping individals to get a fair settlement.

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  • I agree completely it is scandalous. These claims chasers are now starting to claim against brokers who have sold their clients monthly PPI to protect their mortgage. I had a claim against me for a single premium PPI which I had never sold. I was so furious that I knocked on the claiments door. They confirmed that they had never heard of me or my firm and confirmed that they had in formed the claims chaser of the person who had sold it. Turns out it was only a £12 a month PPI and not a single premium anyway. I recently had another enquiry but with a difference. This time they gave the clients mortgage product details which was a GMAC 0.95% BTL TermTracker and asked me to confirm if I had sold any Single Premium PPI or charged any admin/default fees when arranging the mortgage. I had not but the point is that they do not even know if anything was sold. This has got to stop. Evidence of mis selling single premium PPI is one thing but false accusations and requests for information to try and find a potential claim victim is another.

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  • anomonyous at 4.04. Ambulance chasers are parasites (in the main) pure and simple.Trying to create problems that arent there. Read Alans article. It would be interesting to see if you have the same view if you are at the recieving end of a claim!

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