It’s called the tipping point. Individually and as an industry we all have one. It’s the point when enough is enough and action has to be taken.
My tipping point arrived last April. I received a grammatically inept letter from Aims Reclaim, a trading title of Aims Legal, a Blackburn-based CMC. Aims Reclaim and its parent company currently operate under special measures imposed by the Ministry of Justice. The letter requested the return of my client’s premiums in line with Financial Ombudsman Service guidelines listing seven specific allegations relating to a payment protection insurance plan. I have never arranged PPI so my sharp retort threatened legal action for defamation.
Aims Reclaim refused to retract so I invoiced the company for £100, for wasting 40 minutes of my time. This it declined to pay, citing an obligation to investigate under FCA rules. As a result I commenced a small claims action which Aims Reclaim chose to defend, thereby resulting in a four hour train journey to Accrington court.
Having heard my representation, and having seen a letter from the client confirming that no such allegations had been made by her, the judge invited Aims Reclaim to present its case. Its representative claimed that the letter was merely an ‘enquiry’. The judge rejected this, pointing out that it contained seven specific allegations.
After studying the case law the judge established that Aims Reclaim owed a duty of care and that its letter, with its unsubstantiated allegations, had breached that duty. The descriptive she used was “lamentable” and I was awarded my £100 plus costs. Aims Reclaim then had the audacity to request a confidentiality clause, which the judge summarily refused.
What does this mean for advisers? Firstly, it is clear that should any CMC send a letter listing alleged breaches which have not been specified by their client, then it is likely to receive an invoice for wasting the adviser’s time. Secondly, CMCs which claim to work on behalf of their client will have to extend far greater caution because I, and no doubt others, will have no hesitation in repeating this exercise. Thirdly, can I ask that the banks, building societies and insurers follow this example? If every unwarranted fishing expedition and fraudulent attempt was met with an invoice then the present plague of CMCs would be cured.
Previously I had suffered from two fraudulent attempts to empty my wallet by a CMC which subsequently suffered enforcement by the MoJ. Unfortunately a little slap and a ticking off is of small consequence when the reward for chicanery and sharp practice can be hundreds of pounds.
For too long advisers have had to assume the position and endure the aftermath of devious and predatory claims management companies running rampant without effective challenge. Readers will know that I have long lamented the ease with which CMCs are able to draft barely literate letters suggesting mis-selling and containing detailed lists of rule breaches.
These claims are supposedly on behalf of their clients – many of whom remain totally unaware of the allegations being levelled or only believe they have been mis-sold because of false claims made by the claims management company. Such complaints waste time and money and may even involve the intrusion of an Ombudsman investigation even when no product exists and therefore no mis-selling can be present. But matters will be different from now on because on 9 October a court issued a verdict which will have a profound impact on CMCs and their future behaviour.
It is far too easy for advisers who have wasted their time investigating erroneous or fraudulent claims to simply breathe a sigh of relief when able to put the matter to bed. However, it is only by exposing these claims and ensuring CMCs pay the price that we can start to cure the industry of this canker.
Alan Lakey is partner at Highclere Financial Services