Aifa council member writes to PM over false claims ‘culture’
An Aifa council member has written an open letter to prime minister David Cameron warning that a “free money” culture driven by ubiquitous claims management company advertising is catalysing a trend of false claims against financial services firms.
Neil Liversidge, Association of Independent Financial Advisers council member and managing director of Castleford-based West Riding Personal Financial Solutions, details in the letter his experience with fraudulent claims.
In one example, Mr Liversidge says he recently received a complaint about mortgage advice given by one of his advisers, which he believes is a fraudulent claim.
In November 2006, he was approached by a man who was looking for a mortgage for his elderly mother, who was looking for a mortgage that would allow her to live in her property for the remainder of her life. She had no intention of paying the mortgage, so the firm found her an interest-only mortgage.
As the mother was in “considerable distress” about this situation, Mr Liversidge’s firm did the case for a standard advice fee of £295 plus whatever procuration fee was generated.
Every year since, the IFA firm has written to the client offering a meeting “at our expense” in case she had any financial concerns but, according to Mr Liversidge, this has either been declined or ignored. Recently, he received a letter from a CMC on behalf of the client, complaining about the advice given. Mr Liversidge has rejected the complaint.
He said: “When making it, the claims management firm threatened that if we didn’t throw some cash at them it would go to the Fos so I presume it will, and we will fight it there. If we lose we might as well shut the business and every other IFA might as well do likewise, because the message will be pretty clear that we are just cash cows for crooks to milk.”
Mr Liversidge also recently received a call from a different client, asking whether she can get her premiums back from a decreasing mortgage protection assurance using this “PPI thing”.
He went on to explain how PPI was different to this and why some claims are valid and others are invalid but because the client has claims firms ringing and texting “telling us it’s free money” and stating that they will “tell us what to put on the form”, she believed she was entitled to it.
The Ministry of Justice’s Claims Management Regulator recently launched a consultation proposing tough new rules on claims management firms, including plans to end the practice of agreeing verbal contract agreements to submit complaints before fees are taken.
Mr Liversidge told FTAdviser: “Suspend the licence of every CMC immediately - today - pending a wholesale re-think as to how the sector is regulated.”