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Which? hits back at CMC trade body

Which? has hit back at the trade body for claims management firms after it said the consumer group should be “ashamed of itself” for writing a joint letter with the British Bankers’ Association to the Ministry of Justice calling for tighter regulation of CMCs.

The letter, sent to Justice Secretary Ken Clark earlier this week, says there is “significant evidence” of rule breaking by claims firms and calls for urgent action to improve the department’s regulation of them.

Yesterday, Claims Standards Council policy director Andrew Wigmore said it is “utterly disgraceful” for consumer groups to “side with” the BBA. The banking industry trade body took the FSA to court over its payment protection insurance redress scheme.

Which executive director Richard Lloyd says: “It was a big step forward to get banks and regulators around the table and agree a plan of action on what they can do to make it easier for people to claim back mis-sold PPI.

“In addition to this, we are now calling on the Government to take action that ensures third party complaint handlers are properly regulated and bad practice is stamped out, so that consumers get the compensation they are entitled to. If people representing CMCs do not understand that, it reinforces the need for urgent action by the Government.”

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. Julian Stevens 17th May 2012 at 1:15 pm

    Does anybody know if the MoJ regulates ANY firms at all other than claims instigators? I’ve tried to find out by looking at its website but, unlike that of the FSA, there appears to be no register of regulated firms or individuals.

    Clearly, the MoJ isn’t a regulator in the same sense as the FSA yet surely the activities of claims instigation companies are such that they ought to fall within the FSA’s remit?

    After all, they “advise” people (after the event) on the suitability or otherwise of certain personal protection products, they undertake claims on their behalf and they take a cut of any proceeds (commission) ~ often a pretty hefty cut.

    The very fact that the FSA shucked off onto the MoJ responsibility for regulating these firms is in itself extremely fishy, perhaps driven by the potential perception of some sort of concomitance (as opposed to conflict) of interests.

    If nothing else, one might reasonably expect the MAS to offer “guidance” on how to go about checking whether or not somebody’s PPI policy is appropriate. Are claims instigation companies really necessary at all? They certainly don’t appear to offer value to consumers.

    As things presently stand, a whole army of claims instigation companies seems to have sprung up almost overnight and is busy causing mayhem. Meanwhile, the MoJ seems to have been landed with the job without having had time to draw up any sort of regulatory framework or code of conduct for these vultures.

    And, we wonder, is there anything at all in the FSMA about the MoJ acting as a regulator alongside the FSA?

  2. Exasperated Me 17th May 2012 at 3:11 pm

    Julian, I’m seeing double.

    Of course the MOJ claims regulation register is online, do a Google for “claims regulation”. Of course the claims regulators only regulate claims handlers, what other area would you like them to regulate? IFAs?

  3. If the Ministry of Justice lived up to its name, there would be no CMCs.

  4. Julian Stevens 17th May 2012 at 5:25 pm

    Yes, I realise the MoJ’s claims regulation register is online ~ but who or what ELSE does it regulate? Is the MoJ really a regulator at all or was it the most convenient alternative to the FSA taking on the job?

    On the one hand, the FSA has finally woken up to the fact that, due to its own laxity, PPI mis-selling has reached epidemic proportions. So it’s decided that it’s high time it started to stick the boot in and try to be seen to be tough on all these nasty mis-sellers.

    On the other hand, new armies of Claims Instigation Companies have sprung up all over the place and are intent on getting as many people as possible to claim that they were mis-sold PPI. The FoS is reportedly completely swamped with claims that even the most cursory inspections reveal them to be leakier than an old colander.

    So, on the one hand, whilst the FSA has to be seen to be going after the bad guys (chronically late in the day but, hey ho, better late than never), it would be in a slightly difficult position were it to be seen at the same time to be putting clobbering all these scumbag CIC’s who, for their part, would claim that their activities reinforce the redress that the FSA is trying to secure for victims of this latest mis-selling scandal.

    So what has the FSA done? Basically said that it can’t regulate CIC’s and that some other body will have to.

    Problem ~ the FSA is the UK’s only financial services regulator.

    Solution ~ Give the job to the MoJ, which isn’t actually a regulator, but it’s the next best thing so hey presto, all of a sudden the MoJ is given responsibility or regulating CIC’s.

    Actually, it’s the wrong solution. Only firms already regulated by the FSA (such as IFA’s) should be permitted to handle claims for the mis-sale of PPI.

  5. It is interesting to learn that to give advice you have to be regulated but to give advice on whether you were given bad advice you don’t.

    Seems rather perverse!

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