Regulation  

FCA urged to crack down on fraudulent CMCs

Figure 1: Proportion of complaints to Fos using CMCs

 

Mr Osang contacted the Ministry of Justice about a spurious series of claims made by a CMC about him. He said: "The CMC lied to my client, lied to me, threatened me (with court action) and then paid a solicitor to lie to me and threaten me."

The MoJ responded to say it agreed with Mr Osang, and that the CMC in making false claims was committing fraud

Communications from the MoJ to Mr Osang, seen by FTAdviser, said the offences it committed against Mr Osang “may be deemed a fraud by misrepresentation under the 2006 Fraud Act”, the MoJ said it could not investigate fraud, so it let the company off with non statutory enforcement action.

Mr Osang added: "CMCs should be made to pay for unsuccessful claims to the FoS where it can be demonstrated there are no grounds for complaint.

"They should be made to sit exams; after all, how can someone with no knowledge of what financial products are and what risks different asset classes pose advise someone on whether they have been missold?"

Figure 2: Redress by product type (insurance - predominantly PPI - is in orange). Source: FCA

In 2013, Mr Lakey, together with Derek Bradley, founder of online advisory forum PanaceaAdviser, went to the MoJ with a file of complaints against CMCs, citing unfair treatment of advisers and their clients.

Mr Lakey added: "I provided incontrovertible proof that the claims management company had fraudulently tried to defraud my firm and also had the client's letter confirming she had not made a single one of the allegations levelled against me.

The MoJ told me they had taken action but would not tell me what that entailed. The company continue to trade, presumably in a similar manner, whereas any intimation of fraud on my part would result in swift enforcement."

simoney.kyriakou@ft.com