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Ambulance chasers struggle with advice complaints

Ambulance chasers struggle with advice complaints

Claims management companies (CMCs) are struggling to make enough money out of advice mis-selling claims, as they try to move on from payment protection insurance (PPI) complaints, according to one solicitor.

Gareth Fatchett, director at Regulatory Legal Solicitors, explained many claims management companies are dropping out of the market entirely as PPI claims are drying up and the regulator has begun consulting on when to draw a line in the sand.

At the end of November, the Financial Conduct Authority asked how a deadline would work, following proposals the previous month to help banks to draw a line under the long-running saga over the mis-sold insurance.

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That consultation concludes at the end of this month but advisers are already raising concerns about what the so-called ‘ambulance chasers’ will move on to post-PPI.

Mr Fatchett said many larger firms have already started to switch to more complex claims, including the advice involved with pensions and at-retirement products.

However, he also suggested many do not have the manpower or expertise to be able to actually make these stick.

He said: “Most don’t have the intellectual power in-house to deal with more sophisticated claims, often they can’t go to court because they are not solicitors and only have para-legals employed to fill out forms and file complaints.

“CMCs need to significantly change the way they do things, because with bigger claims against insurance companies they will run into experienced lawyers and just can’t make the cash required to stay in business.”

One example of this is that claims handling firm Rebus filed for administration last week.

Documents seen by FTAdviser stated that ReSolve Partners were appointed as administrators for Rebus Management Services, Rebus Investment Group and Rebus Investment Solutions.

Rebus was believed to have been managing 1,700 claims against scheme promoters and accountants, worth a total of more than £930m.

More than 100 crowdfunding investors also stand to lose out, as Rebus raised more than £800,000 through Crowdcube last year, with individuals investing between £5,000 and £135,000.

At the start of December, the Personal Finance Society and Association of Professional Financial Advisers united against ambulance chasing firms’ negative impact on both advisers and their clients.

The debate was reignited by Apfa’s chairman John Gummer, who rallied against the increasing time and cost burden for advisers in having to deal with often spurious complaints brought to the Financial Ombudsman Service via claims managers.

This led to The Claims Bureau’s chairman Peter O’Donnell being given a right to reply, stating that CMCs give consumers a chance to be heard in an industry where they have no representation.

Apfa council member and West Riding Personal Financial Solutions managing director Neil Liversidge argued that CMCs should be required to pay the case fee up front on a non-refundable basis for every claim they bring.

He also suggested that advisers “need to grow a pair” and be willing to take action against CMCs targeting them.