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.”