Rise in CMCs is payback for abusing the public
Complaints over mendacious claims are valid, but the sector must accept that these companies are a product of its own failings.
The Financial Ombudsman Service’s decision to raise the number of fee-free complaints that can be made from three to 25 a year has, perhaps predictably, received a mixed reaction from IFAs.
While this is undoubtedly good news for many smaller firms that receive few complaints, the networks are unhappy.
Fos has understandably decided that the 25 limit must apply to the whole network, not to individual firms operating within it.
I am afraid that it was inevitable that Fos would make this decision. And advisers must accept it as part of the swings and roundabouts of signing up to a network.
Besides, the real issue here is not Fos. It is the number of complaints that are being received.
Many IFAs are now singing from the same song sheet as the banks and blaming claim handlers for the rising numbers of complaints.
But once again we must step back and analyse the situation. Where have these claims handlers come from and why are they so successful?
I will not argue with the fact that a lot of spurious claims are put in. Banks frequently receive claims from people who have never been their customer.
However, if there had not been so many successful claims then the claims handlers would never have got off the ground.
It all comes down to the fact that when customers or clients had complaints they were often fobbed off or met with tactics designed to grind them into submission. Or they simply found the mis-selling claims procedure too complex to handle on their own.
In comes the claims handler, offering to sort it out for an eye-wateringly high commission.
But the customer does not care because it is better to get some money back than none at all.
The claims handling business is undoubtedly Wild West country. Advance fee fraud is not uncommon and cases that may prove too challenging are cast to one side.
Speculative claims are made with the scantiest of evidence leading to unnecessary work for the recipients.
A lot of spurious claims are put in, but if there had not been so many successful claims then the claims handlers would never have got off the ground
The sector is poorly regulated by the ministry of justice and there is a desperate need for tough new regulation.
And I suspect this is one occasion when financial advisers would welcome more regulation.
But never forget that the sector is purely the product of a financial sector that abused the general public. Without that abuse it would never have seen the light of day.
Deal or no deal?
Saffron Building Society’s decision to launch a 95 per cent mortgage may not be an instant headline-grabber but nonetheless it is worthy of examination.
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