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Alan Lakey: Action needed on new wave of dubious cold callers

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

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Comments

There are 9 comments at the moment, we would love to hear your opinion too.

  1. Alan – this is a genuine worry at the moment. I run a small (2 partners) CMC dealing principally with pension transfer issues created – in truth – by a small group of failed, or “phoenixed” advice firms. And – for clarity – we have never cold called or bought in data – clients find us through their current adviser referring them to us or via Google. I was called twice yesterday re this very thing. The guy said he could “guarantee” to save me money. When i explained that I was an impaired life (T1 Diabetic for over 29 years) and that my protection was via a specialist outfit at Lloyds of London – he then immediately switched to talk about his expertise with financial advice generally I was aghast – I told him that i believed that this was a cold call, and that he was breaking the rules – he hung up. he also wouldn’t tell me where he got my data from. But he seemed to know more about me than i would have expected! That said, I have found the team at the FCA involved in regulating CMCs very helpful and supportive – and they will refer any names of firms to the right part of the FCA – it’s worth (as you obviously did) doing a Companies House search, and FCA register search if you can while they are talking.

  2. Julian Stevens 14th June 2019 at 1:52 pm

    I’m not sure auspices (as in under the auspices of the FCA) is quite the right word, Alan. More like under the FCA gun.

    That said, I thought all and any cold calling had been outlawed ages ago. So why are certain firms still at it?

  3. Surely, more communication to increase the awareness of the general public is required from Govt.? The scammers are even using automated calls purporting to be from HMRC and accusing one of fraud with a telephone number to call. TV/Radio/National & Local Newspaper advertising may be a good way of doing this?

  4. Surely better communication from Govt. to increase public awareness of this new scam is required? There is even an automated message HMRC scam doing the rounds at the moment, with a telephone no. to call. Maybe a weekly advert on TV/Radio and in National & Local Newspapers/Magazines may help?

  5. I liked it so much, I said it twice, Oops!

  6. Julian Stevens 17th June 2019 at 9:12 am

    I said right from the start that cold calling is impossible to police, much less eradicate. Most cold call centres employ ID blocking software and offshore call centres are beyond the reach of the UK authorities anyway. The idea that cold calling can be prevented merely by outlawing it is completely hopeless. I still receive as many cold calls as I ever did.

  7. Christopher Petrie 23rd June 2019 at 9:26 am

    It’s only pension cold calling that’s been outlawed.

    So, yes, you will be receiving cold calls on other matters.

  8. Are you still banned from Santander for your abusive phone calls? Something about kettles and dark colours perhaps.

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