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FOS calls for tougher regulation of claims firms

Financial Ombudsman Service chief executive Natalie Ceeney says she shares the industry’s concern that claims management firms should be subject to tougher regulation.

Speaking at the British Bankers’ Association international banking conference in London today Ceeney (pictured) acknowledged that many consumers feel they do not have the time or ability to bring a complaint themselves, which is why they turn to claims management firms.

But she said: “There are very variable practices among these companies – including some sharp practice from those who ‘cold call’, promising ‘no win, no fee’ inducements to potential customers, some of whom may have no reason to complain. And we know that some claims management companies fail to check even the most basic of facts, such as whether the product complained about was bought.

“I hear widespread agreement – from industry and consumer groups alike – on the need for stronger regulation of the claims management sector. We share this view.”

Ceeney added if banks were to improve their own complaints handling process this would mean there would be less demand for claims management firms.

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Incompetent Regulators Awards Team 29th June 2011 at 4:13 pm

    We also need a tougher stance of FOS’s stance on fraudulent claims.

    What’s their policy on it?

  2. How to stop a FOS claim - abide by the law! 29th June 2011 at 7:50 pm

    MONEY LAUNDERING.

    Money Laundering rules define FRAUD as a Criminal Act and Civil Act – actionable by Prosecution and or Civil Damages. This is an attempt to obtain (or actually obtaining) money (ie. compensation or rectification of previous status) from a Financial Adviser using statements (whether or not solicited by complaint generating websites or other such media) as though fact knowing these to be untrue could be guilty of FRAUD.

    The important point to note is that it is the he suspicion of these facts alone that imposes upon the Financial Adviser the requirement to report the case to the Reporting Officer and or National Criminal Intelligence Service (NCIS).
    “Suspicion” can be defined as:

    -” a degree of satisfaction not necessarily amounting to belief at least extending beyond speculation as to whether an event has occurred or not”.

    Therefore:

    If I “suspect” a client is endeavouring to obtain money by deception then this could be construed as a Fraud, and is therefore reportable offences under money-laundering legislation.

    Then I am obliged to report this to The National Criminal Intelligence Service (NCIS).
    As a consequence it is an offence for anyone to take any action likely to prejudice an investigation by knowingly informing i.e. tipping off the person who is the subject of a suspicious transaction enquiry.

    This would apply to the FOS.
    Following Dame Bulter-Sloss’s ruling the size of the amount is irrelevant.

    Conclusion:

    It is an offence for any person to provide assistance to obtain, conceal, retain or invest the proceeds of crime if that person knows, or suspects that the other person is engaged in criminal conduct. Such assistance is punishable by a maximum of 14-year imprisonment and / or a fine. Therefore it is a criminal offence for me or for any financial adviser not to make such a report where I “suspect” fraud as the intentions behind any such claim! If a client behaved in such a way as to “Willfully ignoring the obvious” or as Lord David Lipsey said: “knew it was in their interest to forget what had happened to them”. Then a legal obligation exists and the money laundering provisions of part 7 of the Proceeds of Crime Act 2002 (POCA applies.

    I believe I must report the “suspected” fraudulent claim.

  3. @ Incompetent Regulators Awards Team | 29 Jun 2011 4:13 pm

    The stance is ‘Frivolous and Vexatious’. It in the DISP rules and it’s in the latest issue of Ombudsman News.

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