Most of us have been plagued by unsolicited emails, texts, calls and unsavoury adverts trying to persuade us to claim for payment protection insurance or road accidents that never happened.
Now claims managers have fallen under the auspices of FCA regulation and are shortly to lose their golden PPI egg, they are desperately searching for new targets. We often hear word of financial advisers morphing into claims managers, but this worrying transition is, bizarrely, also happening in reverse, with many former claims managers moving into the protection market.
Recently, there has been an upsurge in consumers receiving unwelcome calls from supposed specialist protection advisers. The frequency of calls suggests these “specialists” have all bought the same set of “leads” or accessed the same purchased database.
Most of the firms emanate from South Wales or the Manchester area, and a Companies House examination shows them to typically be of fairly recent origin. A further check shows many of the directors are also involved with other businesses, ranging from current or former claims managers to financial advisers, marketers and so forth.
Now, you may ask why this is a problem. Surely we all have the right to earn a living? But these temporary firms spring up and do vast damage during their short lifespans, creating numerous problems.
The first problem is consumer detriment. I’ve personally received calls from a firm claiming to deal with such trusted insurers as Ageas, Bright Grey and PruProtect, despite these brands having disappeared more than three years ago.
This shoddiness suggests either a total lack of understanding or, worse, a cynical attack on consumers, which is certain to result in bad outcomes.
Many of these firms claim to have called on behalf of an insurer, which lends a veneer of credibility. Their message is very simple: “We can save you money.” This is without them knowing anything about their potential victim’s existing insurance plan or financial situation.
The second problem is reputational damage. That old adage of being smeared with the same toxic brush applies very much here. Most consumers fail to differentiate between a cold call from a firm of dubious repute and interaction with an ethical firm. To them, we may all fall under “insurance salesperson”, and the bad press of the old foot-in-the-door reputation is thereby enhanced. The third problem relates to insurers appearing overly eager to offer agencies to these firms, with the barest of checks carried out. This process appears indicative of a greed for new business, which overwhelms the commonsense requirement to make prudent enquiries at the outset.
Lessons need to be learned. It wasn’t that many years ago a number of insurers lost millions in indemnity commission when a telesales operation went belly up, even though details of their dubious tactics had been known for some considerable time. This dilatoriness cost one insurer £5.2m.
While our industry is stifled by over-regulation and micro-management, this is one area where some initial scrutiny and FCA action would be welcome.
Alan Lakey is a member of the Protection Distributors Group