Newcastle-based IFA Lowes Financial Management has reported claims management company Emcas to the Ministry of Justice alleging that it has received a number of complaints that are “without foundation and built on a premise of fabrication”.
Lowes compliance director Neil Mclachlan told FTAdviser the firm has received eight complaints in the past 12 months.
Mr Mclachlin said the firm had refused to formally record the latest of the complaints, relating to two clients that were invested in an Isa in 2004, on the basis that the claim was “exaggerated” and “without foundation” and the clients have since confirmed that they did not wish to make a complaint at all.
In documentation seen by FTAdviser, Emcas said the investments were not suitable as the clients had no investment experience prior to the point of sale and all advice provided was verbal, meaning the investors did not see any documentation such as a letter of recommendation.
However, Mr Mclachlin rejected the allegations, saying the clients had a long history of investment having been investors with Lowes Financial Management since 1988 and that a letter of recommendation was presented prior to the investments being made.
FTAdviser has seen documented evidence of investments for the two clients going back to 1988 and the letter of recommendation that Lowes states was presented to clients.
Emcas said that it could not comment on the specific allegations in the case citing client data rules, but it did state it would not pursue claims unless there was “reasonable ground to do so”.
Charlotte Hardie-East, operations director at Emcas, said: ‘It is not in Emcas’ interest to pursue claims unless there are reasonable grounds to do so.
“These grounds may include a failure in the advice process to consider clients’ previous investment experience, whether clients were fully aware of both the charges and risks involved in their product, whether alternative options were explained to them and whether by acting on the advice given clients have suffered a financial loss, either to their capital or the potential interest earned.”
Following an earlier report by FTAdviser, Emcas withdrew a claim against a financial adviser citing a “misunderstanding” after the clients wrote a complaint letter to the Ministry of Justice stating they had never intended for a claim to be brought against the intermediary.
Mr Mclachlan wrote to Emcas stating that his firm will not record the latest complaint and informing it that a report was being submitted to the Ministry of Justice relating to alleged “unreasonable and unprofessional” practices.
An MoJ response, seen by FTAdviser, states that the information in relation to Emcas would be referred to an officer to “review”. It said the process would assist in assessing whether “authorised businesses are complying with the Conduct of Authorised Business Rules 2007”.
Emcas’s Ms Hardie-East said: “We welcome open dialogue with the independent advice community and would invite any intermediary to contact us directly should they feel we have not operated to the standards expected of us.”
She added that Emcas undertakes “rigorous checks and has numerous conversations with prospective clients to establish whether there are reasonable grounds for complaint”.
