CBK principle Peter Chadborn says payment protection insurance claim-chasers should face the same prohibition against scaremongering as advisers selling critical-illness cover.
He says chasers are acting irresponsibly and scaremongering consumers into complaining against PPI firms through aggressive ads.
Chadborn says it is unfair that claim firms can get away with scare tactics while critical-illness cover providers are slammed by the regulator for using these tactics.
But the FSA says claim firms are not regulated by the FSA and it has no control over their promotions.
The Department for Constitutional Affairs has set up a regulatory body headed by former ABI director general Mark Boleat to oversee the claims sector and it is due to start work in February.
FSA spokesman Robin Gordon-Walker says: “We take a neutral position on this but we would say that there is no reason why consumers need to use these firms. If they have a complaint, they can take it to the company involved and if necessary to the Financial Ombudsman Service after that.”
Chadborn says: “It is all down to marketing and these firms can spend money on advertising on TV and in the newspapers and consumers will see these ads.
“But who has ever heard of the FOS? Irresponsible advertising by these firms encourages consumers to take a punt on winning compensation when they otherwise might not have complained.”