No win-no fee, no fightno win. This is indicative of why the mortgage endowment misselling allegations are spiralling out of all proportion.
On the one hand, we see a company jumping on the bandwagon of a no win-no fee approach for complainants. On the other hand, our industry continues to capitulate on a culture of won't fight, give them the compensation.
The culprits are the banks and insurance companies who consider that the cost of attempting to defend their position outweighs the cost of capitulation or, alternatively, they fear the wrath of the regulator or the ombudsman and the ensuing bad press.
Indeed, we recently read of a decision by a major insurance company upholding a complaint despite their disputing all five of the complainant's points at issue.
Of course, they are under pressure from the FSA to speed up their handling of complaints or face fines. This directive apparently results from a recent appearance by insurance bosses before a Treasury select committee.
It is a pity these chief executives did not appear to have any answers other than for one of them to insist that they were confident of meeting the FSA deadline. Did any of them question why the ombudsman is taking between eight to 10 months to deal with each of these very same complaints? Is it not high time that the ombudsman was instructed to speed up?
This firm, while not currently involved in the mortgage market, did write some mortgage endowment business in the early 90s, most of it prior to our joining a network. We have to date had 15 complaints, all of which we can identify as being fuelled by the Consumers Association's propaganda.
We have successfully defended 12 of these cases in house. The remaining three cases have been referred to the ombudsman, taking six, eight, and 10 months respectively to bring to a conclusion. None of these has been upheld.
Our defence was simple. We had an illustration and fact-find in every case. Not every illustration was a comparative illustration and not every fact-find was signed but these documents, together with our vigorous defence, were sufficient to prove that our record-keeping was adequate and the complainant's memory defective. Nevertheless, it has cost us £1,800 in ombudsman fees for the privilege of winning.
What is most galling is that the 12 cases we have successfully defended in house are not reflected in any statistics. If all IFAs were required to submit such figures and all banks and insurance companies resisted the pressure for a quick fix and looked to defend their positions instead of capitulating, the likes of the Consumers' Association and the bandwagon merchants would soon be silenced.
The pension review, flawed from inception, has proved to be a bigger scandal than the scandal it was supposed to address as some final-salary schemes are wound up and many other company schemes are under severe pressure.
IFAs have been robbed of millions of pounds in review and compensation costs. It must not be allowed to happen in the endowment arena and to ensure it cannot, our industry must be prepared to defend its position at all costs. It is time to stand up and be counted.
David Kneale Financial Management,