Damian Fantato  

FCA must clear out ambulance chasers

Damian Fantato

Damian Fantato

If an advice company has been responsible for compensation payouts totalling £11m, should the people involved work in the financial services sector again?

This is the question that the Financial Conduct Authority will now have to answer in the case of Dominic Barry.

His financial advice company, BlueInfinitas, gave advice that ultimately led to the Financial Services Compensation Scheme paying out £11m in claims, mostly as a result of advice given on self-invested personal pensions.

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Mr Barry, who – we should be clear – has had no action taken against him by the FCA, is now involved in running a claims management company that has been given temporary permission by the regulator.

This is not an uncommon turn of events. Indeed, the FSCS has said it regularly sees advisers phoenix as claims management companies.

This will stick on the throat of the many financial advisers who feel they give good advice, particularly when one of their clients could seek out help in getting compensation from one of these phoenixed advisers.

The FCA will now decide whether it feels Mr Barry – and the other 900-odd CMCs it took responsibility for regulating this month – are appropriate people to continue operating their businesses.

CMCs can be an important part of the financial ecosystem, indeed some advisers operate as a CMC on the side.

The onus is now on the regulator to make sure the right people end up running a CMC and clear out those who should not be there.