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FOS refers 13 claims firms to MoJ over bad practice


The Financial Ombudsman Service has referred 13 claims management firms to the Ministry of Justice for “unreasonable” behaviour.

The FOS began recording formal referrals to the Claims Management Regulator, part of the MoJ, in autumn last year. A freedom of information request submitted by Money Marketing reveals three claims firms were reported to the MoJ between 1 November and 31 December, with a further 10 claims firms reported from 1 January to date.

Reasons for referring the claims firms to the MoJ included misleading communications and advertising, the quality of submissions and investigations and suggestions that claims firms are not authorised to carry out activities.

In addition to its claims firm referrals, the FOS made 131 referrals to the FSA in 2012/13 about other financial businesses. This was up 7 per cent from 122 the previous year, however the FOS says there may be some duplicates in the FSA referral numbers.

Reasons for referral included complaint handling issues and referrals to enforcement for failures to pay compensation. Firms were also referred to the FSA for information requests such as historical authorisation details.

In its annual review for 2012/13, published in May, the FOS said it continued to see claims firms “behaving unhelpfully”, with some taking a “lax approach” to understanding clients’ circumstances.

It said cases would be referred to the relevant regulator where businesses or claims firms are “appearing to act unreasonably”.

Highclere Financial Services partner Alan Lakey says: “The numbers belie the malpractice out there among claims firms, and the FOS has only seen the tip of the iceberg. It does beg the question of what the MoJ does with these referrals.”

A spokesman for the MoJ says: “We do not tolerate bad practice by claims management companies. We work closely with the FOS to share intelligence on CMC activities and proactively follow-up all the formal referrals we receive. Those CMCs that flout the rules will be investigated and risk being shut down.”



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There are 20 comments at the moment, we would love to hear your opinion too.

  1. Incompetent regulators 4th July 2013 at 8:48 am

    It’s about time FOS referred fraudulent claims to the police too!

    Oops I forgot they are on sales targets for completed cases.

  2. Neil F Liversidge 4th July 2013 at 8:49 am

    It’s a start. Name names?

  3. Compliance Manager 4th July 2013 at 8:50 am

    These firms need to be named and shamed.

    They are a disease that needs a cure.

  4. Julian Stevens 4th July 2013 at 9:04 am

    So why isn’t the MoJ leading the way in bringing these scumbag outfits to book?

  5. I echo Neil’s comment….

    And I also agree with Anonymous (8:48) that some of the claims made are fraudulent given that they are seeking financial redress based on accusations which are untrue.

  6. Anon 8.48
    Good point re fraudulent claims.
    Should we report them to the police?
    If we report cases we feel are fraudulent and the police knock on their doors it will focus their attention. If 500 IFA’s refer 1 case each to the police it will shake things up and my result in cautions or prosecutions.

  7. Only 13? At least its a start but way too late and not nearly; a strong enough message to stop these leeches operating the way they do.

  8. I received a claim for one of these parasitic companies (sols no less!!!) on Monday for alleged mis-selling of PPI, it turned out after 15 seconds of investigation that our client had basic life cover for their mortgage !!

    Unbelievable they can waste out time like this.

    – they hadn’t even bothered to check any documentation just sent out the usual threatening mass produced letter.

    I fully support the genuine complaints as the selling of PPI has been a massive scandal, but the fly by night chancers need sorting out NOW

  9. Incompetent Regulators 4th July 2013 at 10:08 am

    Re reporting to the police. I did this years ago with a fraudulent claim who even my local MP concurred with me. The police tel the FOS and the FOS put them off the scent by telling them it was not deceit. The police subsequently dropped the case.

    The FOS is the largest CMC out there with political backing. That’s the real problem.

  10. Colleagues, can we please have a concerted effort to ensure all the spurious, time wasting correspondence from these cmc’s is referred directly to their Regulation Unit. Please set up a template on your pc and refer all these non compliant fishing expeditions to:
    Miss V M Laville
    Claims Management Regulation Unit
    57-60 High Street
    Burton upon Trent
    DE14 1JS

    Tel: 01283 233360:

  11. So how can we claim against these claim firms for wasting our time and trying to commit fraud against us?
    It is about time we started hitting back.

  12. Derek Bradley ceo Panacea Adviser 4th July 2013 at 11:00 am

    For the fifth labor, Eurystheus ordered Hercules to clean up King Augeas’ stables. Hercules knew this job would mean getting dirty and smelly, but sometimes even a hero has to do these things. Then Eurystheus made Hercules’ task even harder: he had to clean up after the cattle of Augeas in a single day.
    Now King Augeas owned more cattle than anyone in Greece. Some say that he was a son of one of the great gods, and others that he was a son of a mortal; whosever son he was, Augeas was very rich, and he had many herds of cows, bulls, goats, sheep and horses.

    Every night the cowherds, goatherds and shepherds drove the thousands of animals to the stables.

    Hercules went to King Augeas, and without telling anything about Eurystheus, said that he would clean out the stables in one day, if Augeas would give him a tenth of his fine cattle.

    Augeas couldn’t believe his ears, but promised. Hercules brought Augeas’s son along to watch. First the hero tore a big opening in the wall of the cattle-yard where the stables were. Then he made another opening in the wall on the opposite side of the yard.
    Next, he dug wide trenches to two rivers which flowed nearby. He turned the course of the rivers into the yard. The rivers rushed through the stables, flushing them out, and all the mess flowed out the hole in the wall on other side of the yard.

    So in this tale please substitute where appropriate the FOS, MoJ, and CMC’s and on this occasion well done FOS, but if only 10% of those supposedly miss sold PPI, there is a lot more ‘shite’ still to be washed away.

  13. I have recently sent a bill to a CMC which wasted my time with a non-complaint. They refused to pay and I sued.

    They have argued the toss and we are due in court shortly.

    Let’s see whether the courts believe that advisers time is worthy of being wasted.

  14. Good luck Alan.

    Its about time someone stood up to these crooks!

  15. Keep us posted Alan
    good luck

  16. Nick Sehrkutty 4th July 2013 at 1:39 pm

    Good luck Alan, rooting for you mate.

  17. Simon Kershaw 4th July 2013 at 2:02 pm

    Mendacious claims submitted by CMCs on behalf of clients leave the CMC itself open to prosecution under the Serious Crime Act 2007, sections 44,45,46.

    Solicitors who act as CMCs are scared witless at the threat of such a charge.

    Try it.

  18. As always everybody concentrates on the worst part of the claims industry – chances are, if you have sold properly, you have not heard from the (admittedly a minority) number of professional claims firms out there. Unfortunately many advisers automatically assume a claim has no merit and don’t believe they can be at fault – i’m dealing with one case where the Demands and Needs statement demonstrates the policy is neither suitable nor required yet the adviser won’t enter into a discussion , he shouts abuse and slams the phone down, yet the industry view is that he is professional and I am not.

    My solution is that for cases referred to FOS for regulated CMC’s each party pays half of the current case fee i.e £450 each. The losing party pays the other side £600 on completion of the case. This would discourage spurious claims and free up time for FOS to deal with the huge number of claims currently wrongly defended by lenders.

    Whilst this does mean treating customers and CMC’s differently – I would have no issue with different admin providing the decision process remains consistent.

  19. @CMC Manager – unfortunately there are too many spurious claims that have seriously tarnished your industry. If I get 3 calls a week on my home phone (which is by the way TPS registered) that is the norm and they are all talking BS to me. They all sound very plausible on the phone, so to someone who doesn’t understand the industry they may well be hooked in and claim for something that isn’t there!

    At the last network I was at, I saw one CMC letter claiming a mis-selling of PPI and it was waiver of premium – they don’t even know what the difference in products are. I have also seen claims of where a broker has set the mortgage up, the lender then sells the PPI, but the broker gets the complaint against them. Its all time and money for the brokers that shouldn’t have to put up with this.

    CMC’s need to improve their practices and become professional as what I have experienced so far is so far away from being professional its untrue.

  20. @matt – whilst I completely agree that many in the industry should not be working in it, whilst the prejudice remains that all claim firms are unprofessional, consumers are denied information to make an informed choice. I too get numerous cold calls and texts and the ignorance encountered is breathtaking. As indeed it often is on the BBC and other websites where claims such as the self-employed are never eligible to make a PPI claim.

    As a firm that supported an outright ban on cold calling and has never cold called or sent a text message I guess we will just have to wait for most of our competitors to be closed down

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