The Financial Ombudsman Service has revealed it receives as many complaints about IFAs and smaller businesses from rival companies as it does from claims management companies, calling into question criticism of authorities’ failure to tackle the sector.
Despite the commonly-held opinion that a large proportion of Fos claims towards IFAs come from CMCs, the service yesterday revealed that other financial businesses lodge broadly the same number of complaints against IFAs as professional claims companies.
In response to survey findings published in the latest edition of its newsletter, Ombudsman News, Fos reiterated previous figures showing that only 1 per cent of non-PPI complaints are deemed vexatious.
Rejecting demands from a recent survey to begin charging “chancers” that raise frivolous claims, Fos stated that it had decided against charging either consumers or CMCs as it believes “it would be consumers who would ultimately bear the cost”.
It said: “We’re not that convinced “chancers” is a fair description of the majority of the people who refer complaints to us.
“So as far as charging consumers for our service is concerned, we maintain – and parliament agrees – that their free right of recourse to the ombudsman helps underpin public confidence in financial services.
“And though we’ve thought hard about the option of charging claims management companies to bring complaints to us, we don’t believe this would address any of the controversy surrounding that sector – or prevent “mass complaints” at source.”
Last week, the Association of Professional Financial Advisers urged the Ministry of Justice to take action over adviser concerns that CMCs are increasingly manufacturing claims.
Chris Hannant, policy director at Apfa, said: “The best CMCs provide a useful service to consumers that need it. However, we are seeing more and more examples of claims being submitted by CMCs where there was no product or where there was no evidence of any mis-selling.
“This is fraud. We’re also concerned that the methods being used to obtain new business have become increasingly intrusive.”
According to Fos, the proportion of cases upheld in favour of the consumer in 2012 varied wildly from business to business, ranging from as low as 3 per cent to as high as 100 per cent.
Of claims appealed to the ombudsman for a final decision, about 40 per cent of requests come from financial businesses and 60 per cent come from customers.
