We use cookies to improve site performance and enhance your user experience. If you'd like to disable cookies on this device, please see our cookie management page.
If you close this message or continue to use this site, you consent to our use of cookies on this devise in accordance with our cookie policy, unless you disable them.

In association with

Home > Opinion > Tony Hazell

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.

By Tony Hazell | Published Aug 15, 2012 | Regulation | comments

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.

Page 1 of 2


Our Columnists

Emma Ann Hughes

Emma is editor of FTAdviser and has previously worked for Investment Adviser, Financial Adviser and edited Mortgage Adviser.

Jeff Prestridge

Jeff has been personal finance editor of the Mail on Sunday for a number of years. He writes on a range of subjects and has been a columnist at Financial Adviser since 2004.

Dan Jones

Dan is editor of Investment Adviser and has been a financial journalist for the past nine years. Most recently news editor of a retail fund management publication, he is a previous recipient of the Investment Association's Trade Journalist of the Year award.

Jon Cudby

Jon is editor of Money Management and has 12 years' experience covering retail personal finance. In 2005, Jon was launch editor of FTAdviser and most recently he was head of online content for Incisive Media's financial services titles.

John Lappin

John is a weekly contributor to Investment Adviser with 15 years’ experience in financial journalism and 10 years writing on the IFA sector. He was formerly editor of an IFA trade magazine.

Most Popular
More on FTAdviser