Highclere Financial Services has been awarded £340 through the small claims court after contesting a payment protection insurance misselling claim from a claims management firm.
In a case heard on 9 October at Accrington Crown Court, claims firm Aims Reclaim was forced to pay Highclere partner Alan Lakey £100 for wasting his time and a further £240.20 in legal costs.
Aims Reclaim wrote to Highclere in April alleging the firm had missold a client PPI. It stated seven reasons why the policy was missold, including ‘your sales person did not tell our client the policy was optional’.
Lakey says he has never arranged PPI and that the client in question says they did not make a claim against him to Aims Reclaim.
He invoiced the firm for £100 for wasting his time and when the firm refused, commenced legal action.
The judge found in his favour. Lakey says the judge ruled that Aims Reclaim owed him a duty of care in establishing whether a PPI policy existed before alleging it was missold.
Lakey says: “The judge’s decision confirms claims firms cannot recklessly level accusations about events that did not take place. Further, they cannot make allegations the client has not made or was not even aware of.”
Aims Reclaim declined to comment.
Philip J Milton & Company managing director Philip Milton says: “Claims firms which fish for business without having evidence to substantiate their claims are acting in an unacceptable way. It is admirable that Highclere has taken this to court, but it should really be down to the Ministry of Justice to ensure claims firms are acting within its guidelines.”
In November, Steve Foreman, of GraingerCo Financial Services invoiced a claims firm for wasting his time with an unfounded PPI complaint. He received a cheque for £120.
A freedom of information request submitted by Money Marketing found that, as at July, the Financial Ombudsman Service had referred 13 claims firms to the MoJ for “unreasonable behaviour”.
The MoJ closed down 209 claims firms between April and November last year.
The MoJ’s website states that Aims Legal, of which Aims Reclaim is a trading name, is authorised with special conditions.
Since August 2012, it has been operating under the following conditions: it is prohibited from taking payment from consumers in advance of the provision of a claims management service; it must keep for six months and provide to the regulator on request copies of call recordings with clients or prospective clients; and it must ensure that any business acting on its behalf or providing services for it complies with these conditions.
A spokesman for the MoJ says: “Where we have concerns about a claims management company’s activities we can impose additional obligations or restrictions on their authorisation to safeguard the interests of current clients and the wider public.
“Varying the conditions of a CMC’s authorisation is a serious matter and is a decision taken after careful consideration of all the evidence and the consequences of such actions for clients.”