At a meeting to discuss the problems caused by claims management companies last week in London of cross-party MPs, led by Jonathan Evans, the Conservative member for Cardiff North, it was agreed to write to the Treasury to call for tighter regulation.
Mr Evans said: “The prevalence of spurious claims is destroying legitimate claims made in the interest of consumers.
“The ministry of justice is not a regulator of these firms, it merely registers them. Indeed these claims management companies currently operate without any proper mechanism for regulation.”
The letter will call on the transfer of regulation of claims management companies from the ministry to the FCA, which will require an amendment to legislation.
An FCA spokesman said it could not comment on the proposals. The meeting was organised by Ian Broadbent, director of Lincolnshire-based advisory firm Blue Sky Mortgages, and Labour MP for Scunthorpe, Nic Dakin. It was also attended by financial services providers and trade bodies.
| Call for reform of Fos |
At the same meeting, City barrister Peter Hamilton claimed that Fos was “in need of structural reform” which should include the introduction of a tribunal based on the rule of law. He said the current complaints framework, which allows claims management companies to operate with impunity and the Fos to impose fines with no right to appeal, could be in contravention of the European Convention on Human Rights. There are currently no financial implications for claims management companies even if they are unsuccessful with claims. Costs are borne by the advisory firm. Mr Evans suggested there was no appetite for the reform of Fos in parliament, and urged firms to concentrate on greater regulation of claims management companies. Mr Broadbent said: “I absolutely support the regulation of claims management companies by the FCA, but I don’t agree with Mr Evans’ assertion that there is no appetite for the reform of the Fos. If the current system could be in contravention of the ECHR it needs to be challenged. We need a judicial review. A lack of appetite among MPs is not a good enough reason.” |
Industry view
Donna Hopton, director of Kent-based advisory network Cherry, said: “Issues relating to claims management companies and the Fos are inseparable and the lack of action to sort out Fos is startling.” Cherry is running an online poll on the subject of tougher regulation for CMCs.
Information: http://studio.trustedemail.co.uk/surveys.php?id=14.
Right to reply
A spokesman for the Fos said it would not comment on any proposals for reform, or the greater regulation of claims firms, however he did say that complaints against IFA firms made up just 1 per cent of total complaints made to the Fos.
Complaints against IFAs
2012/13: 4139
2011/12: 2857
2010/11: 2766
