In its latest newsletter, Ombudsman News, the ombudsman dismissed what it called a “widespread criticism” from advisers about a failure to crack down on CMCs and monitor the payment protection insurance sector.
Instead, the Fos warned advisers their peers lodge just as many against them as CMCs do, and cited its figures from last year, which indicated only 1 per cent of non-PPI complaints are deemed vexatious.
In the newsletter, the Fos stated that it had decided against charging either consumers or CMCs, despite calls from industry players and the media to crack down on “frivolous” claims, as it believes “it would be consumers who would ultimately bear the cost”.
The newsletter 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.”
According to Fos, the proportion of cases upheld in favour of the consumer in 2012 varied from business to business, 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.
Adviser Tweet
Phil Billingham, founder of adviser support services consultancy, the Essex-based Phil Billingham Partnership, said: “Well of course, The difference is that clients come to IFAs for advice, and we see the real life damage caused by previous salesmen - often the Bbnks. We do not cold call, send misleading and fraudulent texts or lie about the facts of the case. Does the Fos really not see a difference?”
Background
This comes after 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.”
