Adviser victories show tide is turning on CMC battlefield

Several pieces of recent news have rallied the adviser troops to take on the relentless march of spurious and even vexations CMC claims, which clog advisers’ diaries and waste their time.

Since I arrived at FTAdviser I have heard so many stories of advisers’ being harangued and bullied by CMCs with nothing to lose, while the powers-to-be seemed to take no heed of calls for a long-stop and for tighter CMC regulation.

However, the Ministry of Justice finally nailed its colours to the mast yesterday (25 November) when it launched concurrent consultations seeking to increase levies on claims firms and nail down rules that would require them to make damn sure they have the basis for a claim before sending out their letters.

This news from the MoJ is encouraging. Scattergun complaint letters, which clients have often been cajoled into signing, are a colossal waste of time for advisers - and time is money.

But this is not the only reason I say the tide may be turning. In recent weeks we have also heard several success stories of victories scored by advisers against cynical claims firms, who have been billed for the wasted time advisers are spending investigating apparently baseless complaints.

First we had Alan Lakey scoring a victory against CMC Aims Reclaim when he secured a court order making them pay his hourly rate plus expenses for wasting his time with a spurious claim attempt.

They picked on the wrong guy here: Mr Lakey has been at the forefront of the fight against vexatious claims firm complaints and last year secured a meeting with the MoJ after lobbying then secretary of state for justice Ken Clarke.

This was followed yesterday by the news, revealed exclusively by FTAdviser, that Association of Professional Advisers council member and IFA Neil Liversidge has taken the fight to another firm, Money Claims (UK) Ltd, by demanding a total payment of £3,861 after he spent his holiday looking into a claim that was soundly rebutted.

The CMC did not take up Mr Liversidge’s offer to appeal his decision to refuse the complaint over an interest-only mortgage recommendation to the Financial Ombudsman Service. Mr Liversidge has also threatened legal action if the firm fails to reveal how contact with the client began.

Elsewhere, a Court of Appleal ruling emerged recently which said that a breach of Financial Conduct Authority Conduct of Business Rules alone is not enough to justify compensation.

The ruling means means CMCs can no longer rely on technical lapses in process alone to ask for their clients’ money back if the advice given is found to have been appropriate at the time despite the Cobs breaches.

This morning, another adviser got in touch with his own case from 2012.

Alan Parkinson, adviser at CPD Independent Financial Advisers, set his solicitor on claims firm Reclaims UK after they wrongly accused him of selling a payment protection insurance plan even though he had never even sold any of the products.

The claims firm promptly withdrew its claim and, according to Reclaims UK managing director Paul Evans, paid Mr Parkinson’s costs as well.

Mr Evans admitted to me that times are changing in the CMC sector and that his own company may not be around for much longer, but would not be drawn on details.

All this goes to show that CMCs are not infallible and invulnerable. We shall all be waiting on tenter hooks to see what happens with this MoJ consultation.

In the meantime, keep fighting.

Claims management firms are an issue for firms across the economy, but an advisory sector that is vulnerable to retrospective decision making by quasi-regulators operating with post-crisis hindsight and that is under pressure in the wake of major regulatory change would seem to make an easy target.

They are now realising that advisers are not simply lying down.