Opinion  

Barriers against claims gave rise to scourge of CMCs

Tony Hazell

Tony Hazell

Well done Neil Liversidge for making a stand against claims management companies.

The managing director of West Riding Personal Financial Solutions and Association of Professional Financial Advisers’ council member, wrote to Money Claims (UK) demanding £3861.25 for time wasted investigating what he feels was a spurious complaint.

I would judge that 95 per cent of the population is heartily sick of these companies.

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As consumers we are badgered with texts and phone calls encouraging us to claim for accidents and incidents that may never have happened.

CMCs have been instrumental in driving up motor insurance premiums, regularly strip individuals of a third of genuine compensation that should reach their pockets and cause unwanted headaches with spurious claims.

Many appear to have adopted a scatter gun approach: get a consumer to complain even if there is nothing to complain about, send off a letter and see if you get a result.

I do not know what happened in this particular case but banks have told me they regularly receive claims for payment protection insurance mis-selling from people who have never been their customers. Without fail these have come through a CMC.

But why should these firms be allowed to behave this way with impunity? If an IFA is forced to waste time investigating a spurious claim then the IFA should have comeback.

This is entirely a different matter from a consumer who feels they have been badly treated (even if they are mistaken) and takes a normal complaint route.

And before any of you jump on my back, I can tell that I have never – no, not once – encouraged any reader to use a CMC.

I believe the Fos route provides the fairest and best method of pursuing the vast majority of complaints.

Truth be told, of course, the CMC industry has only grown to these proportions because of the appalling behaviour of some sectors of the financial industry, in particular banking.

It was not so much that they engaged in mass mis-selling. It was that they then made it so damned difficult for people to make a mis-selling claim that fuelled the growth of this industry.

The executives who decided it would be a good strategy to fob off legitimate complaints bear direct responsibility for fostering the growth of CMCs.

So perhaps Mr Liversidge should also send a bill to the chief executives of the big five banks while he is at it.

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