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Robert Reid: Ambulance chasers hunt their next prey

Sometimes in business you can have an exceptional year and, provided you do not take it for granted, all is good. Allowing expenses to match an unsustainable increase in revenue is asking for trouble.

As the claims deadline for PPI draws closer, it is clear the ambulance chasers will be looking elsewhere to continue the level of income they have enjoyed for the past few years.

I can see claims management firms turning to all forms of investment and pensions advice; defined benefit transfers, in particular.

There is no doubt we will see claims in this area increase. Sometimes this will be because clients genuinely did not understand what was going on but, in a significant number of cases, they will have been convinced by the chasers that there is an opportunity to gain a financial advantage.

Advisers targeted by ambulance chasers over DB transfers

If the latter is the sole motivation for a claim, then individuals should feel the weight of the law for being mendacious in any way. We have already seen this in travel insurance.

Saying this is in no way to suggest the ability for people to make claims should be removed. Far from it. But those that are seeking to profit from claims without any proper analysis as to whether someone was at fault should not be encouraged in any way, shape or form.

Other claims around pensions advice will likely centre on options and charges; with investments, we could see many more with regards to closet trackers.

And with more individuals becoming internationally mobile, there is also a risk that getting it wrong on domicile, or more importantly, residence could result in a claim further down the line on incompetent cross border advice. This takes us into the world of Qrops, which is not for the fainthearted, particularly since the changes brought about by pension freedoms.

All of this underlines the importance of the Treasury ensuring that the current disconnect between the Financial Ombudsman Service and the FCA does not continue.

Henry Tapper: ‘We’ve really made a mess of DB transfers’

An adviser recently told me of a seminar he had attended where the FCA representative had to leave before one from the FOS was due to speak. As the FCA rep left the room, the FOS individual said: “Well, you can forget everything he said because that is not the way we think”.

It is exactly that kind of attitude that is unhelpful to advisers and clients alike.

I have never really understood why the FOS and the FCA are two separate organisations, and the lack of cohesion between the two remains a major concern.

The Treasury needs to get a grip of this regulatory infighting as soon as possible or the advice gap will grow even further thanks to an unfair regulatory environment.

We need a fair process to allow people to claim where they are greatly disadvantaged.

Robert Reid is partner at CanScot Solutions LLP

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Comments

There are 11 comments at the moment, we would love to hear your opinion too.

  1. pension transfer no win, no fee, companies are already advertising on the radio.

    I expect I will now get these cold calls in place of PPI and Accident ones

  2. Robert – as a partner in a claims management company that specialises purely i financial services I couldn’t agree more. In the coming round of FCA roadshows we have argued for an engagement with the need to have examinations and qualifications for claims handlers – it’s vital when advising a potential client as to whether they have a legitimate claim or not, that the claims handler understands not just current financial services regulations – but also has a strong grasp of legacy rules – vital re pensions. We do have to terll some clients that , despite what they might hope, they don’t have a valid claim. There’s a misunderstanding about the difference between inappropriate advice, and simply suffering a financial loss. If you were compensated for that we wouldn’t need risk profiling etc! Our firm has never used call centres, cold calling, email campaigns, text campaigns etc etc. Indeed, well over half of our clients – this year to date and throughout last year, were introduced to us by their adviser, who had usually spotted something amiss during an annual review, or when meeting a new client. We also argue for a cap on fees for CMCs. The QROPS issue is real right now. Some other jurisdictions do have good regulatory bodies that are helpful – but not all. I have seen DB transfers into QROPS for poor folk who had no intention of living abroad, and absolutely no idea what they were being persuaded to do. Beyond regulation and compensation, there is an enormous requirement for “prevention”. I believe that this should start in schools. The level of “financial literacy”, for want of a better phrase, amongst all ages and classes of the UK population, is astonishingly poor. This really does need to be addressed by our entire industry.

    • When you say a cap on fees, do you mean fees for work done or a commission for a successful claim? What level of cap are you talking about, 5, 10, 15%?

    • Julian Stevens 15th June 2018 at 5:18 pm

      I am inclined to accord you the respect of being one of a very small minority (of decent and ethical) CMC people.

      All (not just a few of) the complaints submitted by CMC’s that I’ve seen (including three to my own firm) have been nothing but a standard tissue of lies (and all were rejected with no comeback). We even received two complaints about endowments from one company (down in Paignton) which, apart from the names of the clients, were identical. Most of these people really are scum with no scruples whatsoever.

      If the FCA’s new regulatory regime does anything at all, I would hope that it will include harsh sanctions against CMC firms found to have tried to obtain money by deception, i.e. fraud.

      • Julian, I must agree in respect of vexatious claims. It’s frustrating to hear stories of this nature – and you are not alone in experiencing or sharing them. We set a very high bar for evidence when discussing claims with clients. The most important initial effort is to ensure that evidence of advice actually exists. It may seem an obvious point, but without evidence of a factfind, a suitability report, or pension transfer analysis document, and then transaction statements from providers showing that fees had been paid in respect of advice; coupled with clear evidence that the proposed investment/pension did not match the client’s stated attitude to risk and personal circumstances at the time of advice -it’s hard to understand how a claim could be submitted to an IFA, the FOS or the FSCS. Perhaps the FCA could look at vexatious claims in the way that the CPS regard wasting police time?

    • I welcome your comments re qualifications perhaps we also need more relevant qualification re FOS and their sub contractors

      • Yes I think the the FOS and FSCS do work hard around CII type qualifications – but training from a wider perspective would be beneficial. It would help everyone if accurate cl;aims handling was achieved first time, every time. I did find your piece most interesting and challenging. I look forward to more of the same!

  3. @Ken Hanning
    So, do you work on a contingent/commission basis and if so, how much do you charge?

  4. An adviser recently told me of a seminar he had attended where the FCA representative had to leave before one from the FOS was due to speak. As the FCA rep left the room, the FOS individual said: “Well, you can forget everything he said because that is not the way we think”.

    Did this really happen, I cannot believe this wasn’t all over the pinks if the FoS representative did say this???

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