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Claims company boss blasts FOS review in letter to MPs

The director of a claims management company has accused the Financial Ombudsman Service of conducting an independent review of its operations “behind closed doors”.

After a series of allegations of poor practice in a Channel 4 documentary, including lack of training for staff, biases among adjudicators and lengthy delays in processing complaints, the FOS agreed to an independent review of its service.

Former Which? director Richard Lloyd conducted the inquiry, and produced his report in July.

Lloyd was unable to find evidence of systemic bias, adding that allegations that thousands of complaints were left unanswered could not be substantiated.

Did FOS deserve the Channel 4 treatment?

However, he recommended a number of areas for improvement, including making better estimates of future caseloads and costs to improve efficiency, clearer guidance on awards for distress, and educating consumers better on the role of the FOS.

In a letter to the chair of the Treasury select committee of MPs Nicky Morgan published this week, Fairer PPI director Stuart Bonnell claims that the review was not open enough did not consider many criticisms against the service.

Bonnell writes: “We could find no site or way to access the review process. An attempt to contact Mr Lloyd via his twitter account went unanswered. Although Mr Lloyd alludes to ‘service users’ contacting him, he does not quantify nor expand on what evidence he received or used.

“It appears to have taken evidence only from the FOS itself. Given that one of the allegations in the programme was that the FOS stage-managed an earlier visit by a member of the Treasury Select Committee, this is an inherently inadequate review methodology.”

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. Mind you, you do have to take with a large pinch of sale anything written by someone who can (1) address a letter to Nick Morgan by name and then (2) begin that letter “Dear Sir/Madam”. Not a sausage factory outfit then…

  2. “… pinch of SALT …” of course

  3. I had to read this twice before I grasped the huge irony. A CMC firm complains about how the FOS conducts itself.

    I know little of Fairer PPI other than it is linked to a company called Fairer Claims Ltd, established in 2016 and works, it would seem, with an organisation called Canary Claims that is a trading name of Claims Thru Us Limited

    Many may be aware that FOS complaints about SIPP’s have almost doubled in numbers over the past 12 months.

    FOS numbers released in August showed SIPP claims were the twelfth most complained-about product with 922 complaints, equivalent to 45 per cent of the 2,051 complaints received within the entirety of 2017/18, in just the first three months of this year (April to June).

    SIPP complaints also had one of the highest uphold-rates, with 59 per cent of complaints being upheld.

    I would suggest that it should not have escaped the FOS’s attention that with PPI claims now in their death throws, claims management companies (CMC’s) are at it again, never ones to miss new business opportunities within the financial services sector.

    For example we read that a law firm “has submitted 500 claims to the Financial Ombudsman Service over an embattled Sipp provider”.

    Based on the latest FOS numbers, this one CMC is responsible for over half of the SIPP complaints and against just one SIPP provider.

    The law firm in question, Anthony Philip James & Co, claim that a SIPP provider “failed to treat customers fairly by accepting a high volume of clients who were unsuitable for Sipp investments from an unregulated introducer”.

    Notwithstanding the rights and wrongs of the situation, there are some big questions to ask around:

    Who pays when firms are found to be ‘guilty’ by the FOS from CMC initiated claims relating to unregulated products?
    who pay’s if the firm goes bust as a result of guilt?

    Who profits from the guilt?

    We assume that the CMC’s in question operate on a no win no fee basis, taking a split of any pay-outs that may arise from a FOS decision. When the dust settles perhaps the FOS could confirm how many came through these CMC’s?

    Is it time to look at how CMC’s interactions with potential ‘business opportunities’ and the FOS should be controlled?

    The current regulation allows for CMC firms to ‘go fishing’ within the complaint process rules. If the catch is successful, they are passing the filleting work on to the FOS.

    That must stop.

    The time has come to create a different track for CMC’s when complaints get caught in their trawl net.

    There is a perfectly good system in place to look at ‘miss-selling, miss-advising and miss-buying. Despite all its faults, the FOS is set up to deal with these situations. It is free to use and as a result any redress goes to the complainant.

    If a consumer insists on using a CMC to take the spadework out of submitting a claim against a regulated firm, or even have them manipulate the situation then the FOS should view this in the same way it should when an individual has embarked upon a legal process before the FOS is involved..

    The FOS cannot investigate a complaint if a legal case has been initiated against the firm being complained against.

    The current position, if the CMC initiated FOS claims are successful and the firm cannot pay, is that the CMC’s fees are, in effect, paid by the FSCS and that seems immoral?

    As a footnote, surely the time has come to remove unregulated investments, firms and instruments from the FSCS payout pool, FCA regulation and FOS control and, stop advisory firms dealing, advising or arranging unregulated products.

    I do understand that some advisers see that unregulated products can form an important part of financial planning. But the fallout from these products far outweighs the benefits. Failures can be catastrophic for the consumer, the adviser and their peers, who eventually pick up the tab.

    • With regard use of a CMC when the FOS is free, a simple change would be to BAN cmc’s with the first stage of the FOS process i.e. a CMC cannot be involvwed, not can they charge up to the stage of an adjudicators decision, they should only be allowed to be involved in presenting ADDITIONAL information where a complaint is declined by an adjudicator and the consumer wishes the case to have it’s second look by an actua;l Ombudsman.

  4. How about an investigation of Ambulance Chasers?.

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