The claims management industry has established itself in the heart of the financial services sector.
Some see these companies as opportunistic robbers, preying on the vulnerable, to line their own pockets at any price. But given the response from the junior minister in the recent adjournment debate in the House of Commons, perhaps wider society sees them as crusading small businesses working hard on behalf of consumers to achieve what they rightly deserve.
Depending on the firm and the topic, it is likely that both could be true.
That claims managers have become firmly established through the PPI debacle is undoubted. As the industry continues to grapple with huge volumes of complaints, litigation and regulatory intervention, learning from the past is not something we appear to have been very good at. Mass remedial action is not new, given pensions and endowment compensation in the past.
My former boss at AIFA, Chris Cummings, used to extol that we should not defend the indefensible. It appears that recently, not just on PPI, the wider industry might have been doing just that.
Looking at the levels of complaints coming direct from consumers and through claims managers and then FOS uphold rates, it is clear that the industry is still calling far too many issues wrongly.
If the major banks had not totally lost the trust of their customers, there would be little opportunity for claims manager to exploit and take their 30 per cent cut – a payment that really is not needed given the quality of the Financial Ombudsman machine.
Whilst we can decry the mass claims and the money for nothing mentality which pervades PPI, we need to think about what we are seeing.
Clearly there are too many poor claims firms who are acting badly with high levels of no product ever being sold, forged customer authorities and subject access request fishing expeditions, with no genuine customer grievance underlying the request.
We need to work hard with the Ministry of Justice to shut these firms down. They need to be open to our evidence and support cleaning the industry up.
However, we have to look at ourselves and ask the right questions on legitimate issues. Why has the consumer reached the point of complaining and how are we reacting to that?
We cannot change what has happened but the intermediary world needs to stand tall and now only take quality product from manufacturers which evidence the highest standards.
Given the limited amount the intermediary gets paid, we should not be absorbing the risk of advising on shoddy products.
The recent decisions by Axa to abandon investment advice in bank branches and the Co-op not acquiring more branches makes it clear that legacy regulatory costs might heavily outweigh income today.
Customers come to us expecting that we do not follow the money or the cutest marketing gimmick. Our expertise and our integrity is what sets us apart from the rest.
Our customers want us to de-mystify and tell them what is best for them. Good advice around simple solutions is what stands the test of time. With that positive attitude cancers often get beaten.
Robert Sinclair is chief executive at the Association of Mortgage Intermediaries