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Alan Lakey: Claims chaser fight must be taken to Parliament

My last column highlighted the activities of a claim management company and I have heard that other advisers have suffered problems.

This is a significant matter. Instigating claims by telling a consumer that the insurer will pay out is a tried and trusted method for these parasites and it may be that little can be done about this aspect. However, the next phase is the considered invention of reasons to back up the complaint.

In the two instances I experienced, the charges levelled were specific, such as no fact-find completed, no discussion of other repayment methods and the assertion that the client was led to believe the policy would repay the mortgage.

All these are genuine concerns and, if levelled by or on behalf of a client, they must be investigated and dealt with in line with FSA rules. Nonetheless, in the two instances mentioned, the clients had not made any such accusations. In fact, they had not made any accusations and the first they heard about a complaint was when I approached them for clarification. The claim instigator had fabricated them.

Let’s not forget that the aim is to get the complaint before the Financial Ombudsman Service where its inquisitorial approach just might unearth some reason to find the adviser guilty.

My recent letter to the Ministry of Justice made clear that two provable attempts to defraud my company had been attempted and this implied a major problem with this company. I surmised this would possibly galvanise the MoJ into some form of investigation with appropriate and draconian consequences. Not so.

The MoJ’s reply was a standard template letter referencing payment protection insurance claims. It stated that the MoJ receives many complaints about claim management companies operating within the PPI sector and rambled on about how the MoJ works closely with the FOS and the FSA to improve the handling of consumer complaints. It finished with the assurance that it would “continue to closely monitor trading practices within this sector and use the intelligence gathered to prioritise and target enforcement work”.

Notwithstanding that my complaint had nothing to do with PPI or the handling of consumer complaints, I was hardly comforted by this final promise.

I phoned the MoJ but was not allowed to speak to the letter writer, instead being dealt with by the receptionist.

Having outlined my concerns, I was telephoned back to be advised that my “evidence” was insufficient for them to investigate any further.

This is a very poor outcome, especially as I had purposely not included any evidence within my complaint. I was kickstarting the complaint process and assumed I would then be asked for evidence during the course of the investigation. Others have labelled the MoJ as “toothless”, which seems an overly kind epithet, given the insouciance with which two specific counts of attempted fraud have been treated.

I will take this further with the MoJ and via my MP. Let’s be clear, advisers have to work to the highest professional standards yet we are convenient prey for all manner of fraudsters and opportunists who are enabled to stalk us with impunity. Maybe it will take an action for defamation to resolve the issue.

Alan Lakey is partner at Highclere Financial Services

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Comments

There are 14 comments at the moment, we would love to hear your opinion too.

  1. Alan, have a read of the criminal consequences of Obtaining a Pecuniary Advantage By Deception.
    http://en.wikipedia.org/wiki/Deception_(criminal_law)
    Might be worth getting an opinion on it as it applies to any claims company that fabricates statements!

  2. Rob Derry (Brunel Mortgages & Loans) 13th December 2011 at 9:19 am

    I agree that something has to be done. Only yesterday we had 2 complaints wrapped in to one. The first was about arrears charges so that should have been directed to the lender. The second was about a PPI policy going back nearly 8 years. The client had previously complained about this and after a lengthy process the FOS ruled in our favour.
    Both of these complaints had been made “after a rigorous fact-find” by the claims company apparently.

    So that is about 45 minutes I spent yesterday dealing with utterly baseless complaints. How many people must larger organisations such as the banks employ to deal with this? We can get up to half a dozen of these a week and, as Alan says, the MoJ are just not interested in regulating this sector properly. I too have spoken to them and got very little of any substance in reply.

  3. Alan, What would happen if you reported this to the police? It would appear that a crime is being committed if it is fraud and they should investigate it? Just a thought.

  4. We have had 2 such complaints in the last 3 months. Both unfounded. The time taken to deal with these fraudulent complaints cost time and money and are simply a nusiance. It is high time these CMJs were regulated or at the very least had to pay something to lodge a complaint.

  5. I worked in a mortgage emdowments complaints department in edinburgh for a life assurance co. All of the complaints I saw were either from these parasites or from the mail on sunday template.

  6. In the last couple of months I’ve received about 20 or so phone calls from these people informing me of the good news; I’m entitled to compensation for miss sold PPI insurance. As I’ve never ever taken out PPI insurance this is good news indeed. When challenged these people, usually foreign sounding can get rude and abusive. So they get short shrift and goodbye from me. This is out of control now and it’s about time this was regulated against as they’re clogging up the system, causing many problems for genuine IFA’s and advisers and have no other interest apart from making as much money as they can out of the flawed complaints system that exists now. The MOJ are responsible for this and must be made to regulate this properly.

  7. I agree with the comments and concerns raised by Alan, also the various responses supporting him. Although my firm are mortgage advisers and not IFAs we have been faced with similar, baseless claims.

    For the second time in a few weeks we haveb een faced with a claim for misspelling of PPI with loans. In neither instance did we provide this cover. As the loans in question are both more than 6 years old we have had to spend time delving into our records.

    However, what really concerns me is that all members of my staff have received telephone calls from claims companies asking whether these companies can act. They always ask whether or not loans or credit cards have been taken and if so was PPI also sold. Even when these companies have been advised that this was unlikely, it has been suggested that a claim be made just in case and it has even been suggested that if the loan company has not kept records, bearing in mind the 6 year limitation for DATA protection, then the loan company would be unable to defend such a claim. In effect they are putting words into the mouths of their potential clients. Unfortunately no details are available for the callers, however, their script is always very similar.

    The claim received today lists 9 claims as follows:-

    1) At the time of purchase, I did not request the PPI policy
    2) I do not recall indicating on the form that I wanted to take out a PPI policy
    3) I was told that by taking out the PPI policy, this would increase my chance of getting the loan
    4) It was not made clear that the PPI policy is optional
    5) I was not aware that the PPI Policy was paid up front by a single premium
    6) I was not told that there were different sorts of PPI policies, some of which did not require an upfront payment of the whole premium.
    7) The full cost of the PPI policy was not explained to me as a separate cost from the cost of the loan
    8) When I was sold the PPI policy, I was NOT working unpaid work
    9) When I was sold the PPI policy, I was not asked about my medical history

    I have to say the earlier claim was couched in very similar terms.

    My own records indicate that in the latest case the clients were both unemployed and had medical problems. The had a possession order threatened against them. The documentation that I hold also shows that PPI was not sold. Additionally, the loan company records also confirm these facts.

    The loan company also advised that another recent claim had been paid. In this case the compensation had been used to clear the arrears on the secured loan. The claims company therefore claimed their 40% of the compensation from the client, who could not pay. The result the claim company is now taking action against the client.

    In my recent case the MoJ was simply not interested.

    Yes I agree, action needs to be taken against the banks for this misselling of PPI, however, the time for strict regulation of claims companies has also come as I feel that many claims companies are now commiting fraud. Would a complaint to the police result in action over this, I very much doubt it.

  8. What happened to the post regarding Common Purpose? Why was it removed?
    We should get a freedom of Information requesting how many people employed at FSA FOS FSCS & MOJ have been on these Common Purpose Courses. It would certainly explain a lot of the madness.

  9. Neil F Liversidge 13th December 2011 at 12:22 pm

    I completely support Alan in this and can only echo the comments above. Fraud by misrepresentation is an offence which can encompass any kind of statement or assurance made in the context of negotiation or other communication. I would not hesitate to report an offending claim chaser to the police as well as the MoJ. Also I make a point of reporting every misleading claim-chaser advert to the Advertising Standards Authority. Fight back folks!!!

  10. Here’s an interesting issue. A few weeks ago I took a call from a Claims Management Co. asking whether or not I had ever taken out an Endowment Policy and if so had a sought redress for it being miss-sold to me! I replied that I was a professional in the Banking Industry when I took out the mortgage linked Low Cost Endowment and as such I fully understood what I was buying & the risks involved. I also informed the caller that the policy is failing to deliver on projected figures but I understood that I couldn’t claim for poor performance as I knew the risk at out-set and my morals would not allow me to complain. The caller said that they had successfully managed to claim redress on behalf of a Bank Manager for an apparent miss-sale so why didn’t I ask them to try for me! Needless to say I politely told them where to go!!

  11. We even received a complaint from a client we did not recognise and could not identify. A little detective work identified the policy, a call to the Life Office ascertained that we had not sold the policy in the first place!
    We contacted the complainant, who admitted that he knew that the original IFA was no longer in business, but had been told to “pick someone from the telephone directory – they’ll never know!”
    My colleagues had to be physically restrained.

  12. I had some friends of mine approach me the other day because they knew that I was in the financial services sector. They had taken out PPI cover and after seeing all the advertisments on television had decided to make a claim. I said to them ‘on what grounds are you looking to make a claim.’ They both looked at each other as if to say what is he talking about. I am sure that they had assumed that because they had bought PPI cover in the past they were automatically due compensation and all they had to do was put a claim in and a large cheque would arrive in the post.

    When I explained that you actually have to believe that you were mis-sold the cover to make a claim. They came up with the reason for the claim being, that they did not know that they had been sold this type of cover. I felt like saying ‘how have you suddenly realised now, when you did not know this fact before?’

    The fact of the matter is that they saw that some easy money was available and they thought that they would get there share of the money available.

  13. Great article Alan – There is a petition set up, this should be made public on MM too!

    http://epetitions.direct.gov.uk/petitions/17198

  14. I hadn’t been aware that the MoJ is a regulatory body in the first place.

    Why isn’t the FSA responsible for the regulation of claims chasing companies and, upon identifying evidence of attempts to defraud, fine them and/or shut them down and/or ban individuals from holding any similar positions in the future? In fact, as far as I’m aware, any company director found guilty of fraud or attempted fraud is banned from holding any directorship for several years.

    After all, that’s what the FSA would very probably do if the culprit was an IFA, isn’t it?

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