A vulnerable client who ended up giving a third of his compensation payout to a claims management company has added his voice to calls for a cap on the fees a CMC can charge.
In this case, the client, who claimed he had attempted to cancel progress with the CMC, told Financial Adviser he had been unable to stop the process.
As a result, he ended up paying more than £11,000 to the CMC - approximately one-third of his total payout.
Felix Milton, adviser at Philip Milton & Co, who now represents the client, said: “In this case, it’s a vulnerable client who tried to cancel but was told he had come too far to do so. It’s ridiculous.”
Mr Milton’s client was invested in potentially illiquid and high-risk investments by the now-defunct discretionary fund manager Organic Investment Management Limited and the advice companies associated with it.
According to Mr Milton, this is a prime example of why there should be a cap on the amount payable to a CMC for a successful case - a call taken up by several financial advisers.
Elsewhere in Financial Adviser this week, reporter Amy Austin unveils a rising trend of pension providers refusing to do any transfer work on even small defined benefit pots of less than £30,000 without the client having a financial adviser or seeing evidence of financial advice.
There is no legal requirement for this for pots below £30,000, but as Steve Webb, partner at LCP pointed out, this could act as a block on small pots being transferred between some leading providers.
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