The gravy train is drying up. The claim-mongers, which have recently adopted the more fragrant description of “claim management companies”, are out looking for new targets.
Endowment business has been overfarmed and, in many instances, the complaints will be time-barred. With-profits bonds are gradually recovering so there is less scope there and the much-hyped contracting-out “scandal” is looking less scandalous and more sensible by the minute as Government interference continues to undermine our retirement plans.
What can a grief-stricken claim-monger do? What is left to complain about? The answer appears to be very little, so it is a case of if you can’t fleece them, join them.
The new big thing is for the CMCs to push into providing financial advice, possibly on the dubious basis that previously successful complainant clients will flock to them in droves.
How can this be? The answer is very simple – that terrible IFAs have been giving such frightfully bad advice that the claim-monger, empowered by his previous sorties, is able to ride in triumphantly, resplendent like a knight in shining armour.
By way of explanation, the Claims Standards Council advises that many of these heroes were brokers or insurers in their previous lives which, of course, raises further questions, such as, why did they leave if they were that good and what, if anything, has changed in the intervening period?
My experiences expose many claim-mongers as inveterate liars who believe that collating a list of outrageous defamations and dressing them up as a valid complaint somehow entitles them to a fee of 25 per cent plus VAT. Many firms leaflet-drop or cold-call door to door or via the phone. Others have arranged for stands inside shopping malls where their insidious leaflets are distributed by attractive young women.
Insurers tend to be easy prey, seemingly throwing in the towel and paying redress in a reckless manner. Typically, they fail to retain robust files and they also deem it financially prudent to meet small claims rather than fund the cost of fully investigating them.
IFAs are a tougher proposition as they tend to retain client files beyond the regulator’s required timescale and they also defend their position more avidly than providers.
The Financial Ombudsman Service confirms that using these companies does not improve the likelihood of the complaint being upheld. To me, this is not surprising because, far from adding value, they actually detract from the complaint by levelling accusations that can easily be disproved, thereby weakening the remaining arguments.
From any rational perspective, it would be good news for everybody if these organisations withered on the vine or moved on to other arenas where their tactics offer less opportunity for deception.
From an adviser’s view-point, every complaint lodged, whether valid, vexatious or fraudulent takes away hours of manpower with the associated cost of investigating the claim. It additionally raises the prospect for numerous FOS case fees which, at 360 a time, are levied without recourse to the merits of the complaint.
The consumer wastes 29.375 per cent of any redress paid, which means that any valid complainant is not actually placed back in a position relevant to having a repayment mortgage.
The ombudsman’s postbag would also be lighter, with a resultant reduction in ongoing costs. Perhaps more important, the newspaper consumer pages would be able to focus on more positive issues than the latest musings of a collection of self-interested parasites.
Alan Lakey is a partner at Highclere Financial Services