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FSA warns brokers over claims chaser referrals

The FSA is concerned brokers could be referring clients to claims chasers without the approval they need to meet data protection rules.

Speaking at the Mortgage Business Expo in London today, FSA director of small firms and contact centre Lesley Titcomb said the regulator as seen annecdotal evidence of an increase in brokers referring clients to claims management firms and of bad practice in this space.

It says in one case it has seen, the intermediary had evidence from the outset that the client’s claim was unlikely to be successful.

Titcomb said: “I would just like to say that if a claims management company approaches your firm, be careful.

“We have seen firms failing to consider their data protection obligations when referring customers without the appropriate consent, others failing to perform any due diligence on the claims manager they refer to, asking no questions about success rates, the average length of time to complete on a claim and refund policies where fees are taken up front. “

Titcomb added: “While we recognise there are good claims managers out there, as with any sector there are poor firms and we expect you to act with integrity and to make the fair treatment of your customers central to what you do.”

In her Expo speech, Titcomb also said it was not the FSA’s intention to exclude self-employed borrowers from the mortgage market and challenged some lender practices in dual pricing between branches and intermediaries, although she said the regulator would not intervene.


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

  1. Tracking down the fraudster IFA 11th November 2009 at 8:49 pm

    My advice to any IFA dealing with ‘Ambulance Chasers’ (AC- e.g. parasites) is to write both to clients and the AC and tell them you are handling the complaint strictly under the FOS rules and deal direct with clients. Clients think they can hide beihind AC and thats why they do as it’s a ‘try on’ in nearly all cases. That’s why they don’t normally deal directly because they are not genuine claims in the main.

  2. Somebody doesn’t understand the rules, methinks.

    It is the FSA, not FOS which sets the rules and the complainant appoints a CMC, then you must respect their wishes.

    Writing direct to them and explaining the implications seems consistent with TCF

    From what I have seen, most IFAs actually don’t know how to deal with complaints – probably due to lack of experience but this will not get you off the hook if goes to FOS who are likely to get concerned if you appear to have been obstructive.

    On the other hand, if you know what you are doing, it can be quite fun to show that a CMC is spouting forth nonsense!

    That is not

  3. Compliance Consultant 12th November 2009 at 9:38 am

    Although I am an IFA, I feel I have to defend some ACs.

    Sadly many firms do not handle client complaints fairly, nor do many understand the FSA’s DISP rules.

    In addition to being an IFA, I have vast experience dealing with claims at many different companies, including banks, IFAs and insurance companies and I know that some firms couldn’t give a monkeys about their clients. They solely seek to protect their bottom line.

    In my years as a claims handler, I have witnessed a disgusting attitude from some of the larger institutions (mostly banks and closed life offices) and often use template letters to reject claims without any consideration of the facts of each case.

    In many cases, unsophisticated people were mis-sold to, and since they are financially unsophisticated they do not pursue claims once rejected, even if the FOS is available, hence why an AC can provide a valuable service and justify their fee. Furthermore, having audited some FOS cases, I have also seen several initial FOS adjudications that have failed to grasp a client’s circumstances and the full facts of a case. Again, most of Joe Public do not know you can challenge an initial FOS ruling, or feel it is not worth it. YOu maybe interested to know that many initial FOS decisions are over turned if pushed to the final stage.

    Whilst some “Ambulance Chasers” (a derogatory term coined by the financial services industry for obvious reasons) are cowboys with no good intention, there are some that actually do a damn good job for their clients. This is especially the case where claimants have lost all faith in the industry to deal with concerns fairly, and where they lack confidence due to their lack of financial sophistication.

    It is grossly ignorant to broad brush the claims management industry without having any experience in these matters.

    As an IFA, I have also witnessed poor advice from other advisers but, now that claims management is regulated under the Compensation Act 2006, I am unable to handle a claim for my clients so need to consider whether their interests would be best served by using a fairly priced and professional claims handler with the relevant knowledge and experience.

    In my eyes, its all about value for money, whether an IFA charging for advice, a fund manager charging for performance, or an AC charging to handle a regulated complaint.

    It seems to me that any properly trained IFA would always get a client’s consent before passing their information to a third party. If there is evidence, as suggested in this article, to the contrary, then it would seem that many AC’s are probably more professional than some Financial Advisers!!

  4. I’ve dealt with a number of CMCs in the past, a number of which were not authorised by the MoJ or exempt. In these cases I would write to both client and CMC explaining why I couldn’t deal with the CMC and then deal directly with the client. If a CMC is authorised or exempt and provides client authority they must be dealt with in line with regulatory requirements. As for referring a client to a CMC I personally wouldn’t but I can understand why some IFAs might. Ultimately views on CMCs don’t matter – your client does. Any IFAs that don’t understand their Data Protection responsibilities shouldn’t be in this industry. Harsh but true.

  5. In a previous life I worked for a large firm of IFAs as a trained compliance officer, I have now passed to the so called ‘dark side’. The complete disregard in which these firms treat the clients never fails to amaze me. Having spent my years trying to justify my role as a complaince officer to the advisers at my firm,I now take great pleasure in seeing those responsible for shoddy advise finally being held to account. The worst offenders expect clients to fully review a file without any experience in what should and shouldnt have been done and to again take their word that an essentially worthless policy was recommended in the clients best interests, and when a CMC such as mine gets involved, take offence when we point out their failings. I am positive from my experiences that CMC’s pay much more regard to the FSA’s TCF principle and think the firms serve the purpose for which they are intended, to aid a client in the daunting area of complaints.

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