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.
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.
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