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The Ministry of Justice is failing IFAs over claims chasers

How effective is the Ministry of Justice? We live in an age where a whole industry of complaint-handlers – or instigators as they are known at Highclere – seek to extract every last penny out of whichever unfortunate they select as a victim. In this vile endeavour, truth and veracity are the first victims.

Some years back, an instigator levelled a series of fictitious allegations on behalf of a client. Investigations quickly showed that the client was oblivious to these defamations and had simply signed a piece of paper giving authority to investigate the sale. The client’s complaint was retracted and my subsequent application to the fraud squad resulted in little other than a crime number.

I recently received another complaint letter from the same company. Like the previous effort, it came via the insur-ance company. The letter alleged that the salesperson had failed to establish attitude to risk and argued that prior to the arrangement of a mortgage endowment, the client had no investment experience other than bank and building society accounts. It further contended that other repayment methods had not been fully discussed and the policy terms were inconsistent with the mortgage terms.

I found the letter shocking as this was a client of 25 years standing who, only months previously, I had assisted in switching from endowment to repayment.

Perhaps he had been energised by some newspaper article, automated phone call or door-knocker, so, with a degree of trepidation, I approached him and asked why he was complaining.

He assured me he had not levelled any complaint and was very happy with my advice. I read out the allegations and he was astounded as he had not made a single one. He had merely signed a piece of paper enabling the instigators to approach the insurer – can you see a trend here? He had been told the insurer would foot the bill for any errors and had been specifically assured I would not be approached. Had he known the process, he would never have signed the authority. I reminded him that prior to his endowments, he had operated a unit-linked pension mortgage and we had discussed the transition to and from endowments in great detail, all of which he accepted. As a consequence, he has now instructed the instigators to withdraw the allegations.

This begs a number of questions, the most important being – how is a firm regulated by the MoJ able to engage in duplicity and deceit in order that “redress” can be squeezed from innocent firms? I wiould consider this to be fraud and, from my experience, it seems to be fraud on an enormous scale.

The MoJ requires licensed firms to conduct business “with honesty, integrity and responsibility”.

Isn’t concocting complaint letters a breach of all three precepts? My letter to the MoJ will explain as much.

How many advisers and insurers have been targeted by these and other parasitic instigators? How many rejected claims ended up with the Financial Ombudsman Service, where at best they incurred a case fee and at worst involved a compensation payment due to the infamous FOS natural justice?

Alan Lakey is partner at Highclere Financial Services

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Comments

There are 26 comments at the moment, we would love to hear your opinion too.

  1. Pensions, Whole of Life, Endowments…..scandal after scandal after scandal. We need more MOJ regulated firms in my opinion. The whole ‘advice’ industry has got away with murder over the last 30 years or so and now its payback time.

  2. People in the UK are allowed to question any advice they receive and with millions being paid out it shows the financial services industry has a problem. Ambulance chases would not be around if there was not a problem in the industry. The FSA needs to look very closely at the finance industry and offer better protection to clients.

  3. Good luck with your letter, Alan; I am just taking a bet with myself that, should you receive a reply it will be either Kafkaesque or Orwellian 🙂

  4. I don’t think Greg read the article and has clearly had his fingers burnt. Do you really think false and vexatious compliants are a good thing?

  5. Alan

    You are not alone and funnily enough the complaint we received was about exactly the same issues.

    In our particular case our first time buyer with no previous investment experience was on his third house with an endowment mortage and an investment portfolio he had held for over 10 years!!

    The only ray of light is that most of them are too incompetent to put forward a meaningful case, but that doesn’t stop us having to waste time addressing non existent issues.

  6. All too true Alan, we actually had a policy clawed back at a previous firm I was involved with because another MoJ firm had obtained authority to reclaim PPI from an LV= MLP product… From a client who had also rated us as full marks on the TCF questionnaire we sent in the post following the sale!

    Even more infuriating, our network instructed us to under no circumstances to approach the client, meaning it was never truly followed up in the correct manner, now the client does not have the appropriate protection in place!

  7. Interesting comment Greg. What do you do for a living?

    I agree some bad advice has been given but there are alot good advisers that have done a good job for their clients who are now working in fear of reprisal for what was considered good advice at the time.

  8. Greg Williams and ‘Anonymous’ – that may be, but as the article refers to ‘ who polices Claims Chasers’?

    There are already reports of unethical Claim Chasers hiding their fees or just not doing anything to support their ‘clients’.

    But on top of this – it seem far too many Claim Management companies (CMC’s) are prepared to commit fraud in an attempt to gain money for themsevels/their clients.

    If the CMC’s actually assessed clients fairly and gave appropriate advice on what should or shouldn’t be persued, they would get alot more support from the Financial Services industry – i.e. allow us to allocate resouces to ensure thosei individuals given poor advice do get compensated – rather than having to waid through fraudulent claim after fraudulent claim to find the one that was missold.

    So, I welcome a stronger MoJ doing it’s job and professional CMC’s helping individals to get a fair settlement.

  9. I agree completely it is scandalous. These claims chasers are now starting to claim against brokers who have sold their clients monthly PPI to protect their mortgage. I had a claim against me for a single premium PPI which I had never sold. I was so furious that I knocked on the claiments door. They confirmed that they had never heard of me or my firm and confirmed that they had in formed the claims chaser of the person who had sold it. Turns out it was only a £12 a month PPI and not a single premium anyway. I recently had another enquiry but with a difference. This time they gave the clients mortgage product details which was a GMAC 0.95% BTL TermTracker and asked me to confirm if I had sold any Single Premium PPI or charged any admin/default fees when arranging the mortgage. I had not but the point is that they do not even know if anything was sold. This has got to stop. Evidence of mis selling single premium PPI is one thing but false accusations and requests for information to try and find a potential claim victim is another.

  10. anomonyous at 4.04. Ambulance chasers are parasites (in the main) pure and simple.Trying to create problems that arent there. Read Alans article. It would be interesting to see if you have the same view if you are at the recieving end of a claim!

  11. Philip, like you I suspect “Greg” works for one of these vermin. We have just had two almost identical complaints, in both cases about paymentshield regular premium ASU. The complaint letter referred to the product as a single premium which had been added to the loan. There were several other points of complaint, all of them nonsense. Despite being advised to the contrary by our Network we went round to see the clients are ask what the problem was? They were mortified and had no idea what was going on and certainly didn’t have any complaint. In addition the Instigators charged them £480 x 3 for s asimilar complaint they planned to make re credit cards. They got nowhere and refused to refund the clients. My advice, don’t roll over, go and see the clients and see if there is a real complaint, unless you did sell a single premium I very much doubt there is. These firms should be looked at closely and the rougues shut down urgently.

  12. Alan is absolutely correct. This is criminal activity and should be treated as attempted deception.

    Sadly, though, this possibly an admission of breaching FSA rules as I always understood that approaching the complainant rather than the claims company was forbidden in some way, although Alan’s cases are clearly ones where he did the right thing and avoided embarrassment for the client.

    That would just highlight the craziness of the system though, wouldn’t it?

  13. Rob Derry (Brunel Mortgages & Loans) 25th November 2011 at 4:46 pm

    The sooner the MoJ starts regulating this industry properly the better.

    We receive anything up to half a dozen complaints a week about customers being mis-sold PPI. We don’t sell it. We only arrange secured finance. Since FSA regulation of insurance we have done 2 policies and removed our permissions for insurance a few months after the FSA took over regulation. So, we have to then inform the claims handler that there was no PPI attached to the loan and send them documentary proof. All in all, this will probably take about half an hour, so that’s half a day’s effort a week to answer non-existent complaints.

    If a client walked in to a solicitor’s office and claimed they had tripped on a paving stone injuring themselves and they wished to sue the council, the solicitor would establish the extent of injury, maybe visit the site of the alleged fall, take some pictures and put a case together before contacting the council. None of this investigation is undertaken by these firms.

  14. I would guess anyone who has sold an endowment has probably had a missive from the ambulance chasers. The only complaint we ever received over an endowment came from a publican on our books and since it was out of time our reply to the chaser was, to coin a phrase,not dissimilar to that given to the plaintiff in the celebrated case of Arkell Vs Pressdram.

    Sometime later I spoke with the publican about his pension arrangements and mentioned the incident. The publican told me he had been chatting with a customer in the bar one lunchtime and was asked if he had an endowment mortgage. On confirming it, the chaser produced a form of some description with the words “well, we may be able to get you some money if you sign this” which our man did.

    And indeed when it arrived a whole list of possible complaints was ticked, presumably on the basis that something might stick.

  15. I think we need to be turning the tables.
    I have not had the problems others mention here, but I believe every word Alan Lakey has said.
    As this is fraud, either the Police can taken action OR, both the Police AND the advisery firm can take action. A civil case can be raised against the CMC, with the support of the happy client.
    The only dealings I have had with a CMC were when they contacted me (unsolicited) as a consumer about bank charges. I told them I was not interested, I even told them I was recording the phone call, I even told them I was making a formal complaint. They did not carry out any complaint procedure. Their name is …. CRM and I spoke to Sean Hammer of Lifestyle Claims on 01792 763480. I still have a copy of the recording and in due course (I have up to 6 years after all) I will send it to them AGAIN.

    I have had 1 complaint in 13 years. That came via a solicitor and was a concoction. The former client forgot to tell the solicitor that we record all client meetings as MP3 wav. files and hence the concoction could be deemed a criminal offence. Funnily enough the complaint was then promptly dropped.

  16. The endowment on our first house paid out double the target after 20 years. My thanks to the adviser..

  17. You should make a complaint, Ken, as the adviser clearly misled you by not telling you that it could possibly double and it therefore caused you immeasurable shock and surprise!

  18. I now make sure all client agreements I draft include provision to charge the client if they instruct an ambulance chaser who makes a fraudulent allegation because I have lost count of the number I have dealt with.

  19. Incompetent Regulators Award Team 25th November 2011 at 8:05 pm

    The new Claims Management Company is called the FOS.

    Remember what the new chairman said “Consumer Champion”. What hapened to democracy?

  20. Pensions, Whole of Life, Endowments, what great press stories and opportunities for the leaches to get their hands on someone else’s money! No matter what harm it does to the economy and individual citizens well being.
    Pension mis selling and the scandal that was upheld by the holier than thou brigade meant that the funding of a half decent pension was stopped by huge numbers of people, ultimately leading to compulsory pensions via auto enrolment, as the state cannot make up the shortfall. Most contracting out of SERPS personal pensions will turn out to be the best thing any employee could have done, because, following the latest proposals on flat rate pensions, no State SERPS benefits will be paid at all, How much compensation was paid?
    Whole of Life Scandal…. So now there is the lowest take up of non loan protection cover in a generation. At least a whole of life plan protected widows. A life cover that pays out when you die was a great approach, now it is life cover if you die in a certain timeframe, not as appealing to the public.
    Endowments…… It was such a scandal that some of the plans would not pay off the mortgage in full. Shock Horror! Nowadays about 50% of mortgages have no method of repayment at all apart from blind hope that the property can be sold at retirement, (no pension remember)and a hovel is purchaced with the difference in capital values. If not, well there is always a council flat, guess who pays!
    Let us not forget the people who took out PPI, got sick in line with policy provisions and al least had their payments made. If they had no PPI, what then! Bancrupcy! Now how much will be added to loan interest as the lending risk increases with no PPI.
    When I came into the industry if you borrowed more than 75% LTV on a mortgage you had to pay for cover to protect the lender. This was considered unfair, the practice stopped, All very good in a rising market but now, how easy is it for first time buyers to get a mortgage with even a 10% deposit! So, yet again the taxpayer funds some scheme.
    We have sucessfully thrown the baby out with the bathwater, in all these so called scandals,and these claims companies are manning the pumps to make sure the bath is never filled again! So there is only a smelly baby left.
    Where’s the Justice in that!

  21. As soon as these claim chasers are nailed to the wall the better. I have a 91 year old lady telephoned(despite being on the telephone preference list) told she had a claim against a bank for mis sold PPI and bank charges and insisted that they gave her debit card details to them and promptly took £299 out of her account. She also said that the person who phoned her in a roundabout way indicatd they were working for the bank. We are in the process of getting the £299 back for her.

    This is all remanicent of the endowment debacle where client could remember exactly what was said by the adviser 20 years previously at 7-30pm in the middle of Eastenders.

  22. This is anonymous simply because I do not want to be harrassed even more by the scummy and very persistent salespeople from these outfits posing as respectable organisations. I am not talking about complaints received but 10 phone calls and numerous texts received in the last two weeks alone telling me that I have had an accident or if I have a credit card debt which I might be able to default on legally. I suspect many are from the same firm but different phone numbers are used each time and they break all the MOJ guidelines and rules.

  23. Neil F Liversidge 27th November 2011 at 5:21 pm

    A while back I assisted another adviser who had been targeted by a claim chaser. After checking the file was complete and the advice justified I phoned the client to get his take on it. He made the following statement, witnessed by two other persons listening in on the conversation via Speakerphone: “I’ve been sitting here on the bones of my arse looking at losing my house and I’ve been told it’s a way to get free money. I’ve no complaint about any of the advice I’ve had but if complaining gets me free money I’m up for it.” I should add that he was ‘on the bones of his arse’ because he and his wife had borrowed recklessly to fund a spendthrift lifestyle, and his wife was too lazy to go out and work to improve their finances, even though she could readily have obtained well paid employment as a qualfiied teacher. Personally I would have no hesitation whatsoever in reporting to the police any client who tried to obtain money from me by fraudulent misrepresentation.

  24. Who is the Parliamentary Under Secretary of State for Justice? Mr Jonathan Djanogly MP. A man whose family has (or held until the Telegraph pointed it out) shares in a claims chasing company? While his responsibilities may now have changed slightly because of this conflict of interests, how can you trust the Ministry?

  25. An interesting side issue, censored within my article, was that the client had been introduced to the claims insitgators by somebody at his building society. Whether this is a building society initiative or the employee eraning a few quid on the side is as yet unclear.

  26. My nephew recently worked for one of these parasitic claims companies that employed upto 60 sub-parasites to prey on unsuspecting consumers. After 3 months in the job he decided to leave as he found the whole set up to be a criminal enterprise. Fees were taken upfront and in most cases no file was ever created. Many clients were kept waiting 6-12 months with no results. They were lied to and told that their complaints were being processed. The TV crew from Watchdog had even turned up but obviously the owners refused to talk to the cameras. The reality is that these firms know that they are fleecing people. Anyone with a genuine complaint does not need a 3rd party claims company to act on their behalf. There are prescribed routes of complaint which do actually work and cost the consumer not one penny. My nephew was sickened when elderly widows and poor pensioners were pushed into paying fees with credit cards to be told they can cancel such debts. The reality was this was all a lie and they paid to be told a lie. I have never had a complaint. My clients call me all the time when one of these parasites contacts them. I have a brilliant relationship with clients who look out for me
    because I have always looked out for them.

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