The City watchdog has revealed it would like to hear more about claims management companies paying ex-members of direct salesforces for details about their former clients.
During the question and answer session at the Financial Conduct Authority’s annual public meeting today (18 July), a member of the audience said he was aware some claims management companies were allowing members of direct salesforces to “profit twice” from mis-selling practices.
The member of the audience at the meeting at the QEII Conference Centre in Westminster said claims management companies were being helped by members of providers' direct salesforces to pinpoint who to contact about provider’s past product pushes.
He said: “They got paid upfront commission for pushing these products for providers and are now getting paid back end commission by being paid referral fees by ambulance chasers.”
Andrew Bailey, chief executive of the FCA, said he would like to learn more about these practices as the regulator prepares to become the watchdog for claims management firms.
He said: “All the evidence and information we can get is most welcomed.”
The regulator stated April 2019 is likely to be when the FCA formally takes over keeping an eye on claims management companies.
As FTAdviser revealed earlier this year if you search for Financial Ombudsman Service decisions featuring a “claims management company” published online between 1 December 2016 and 26 January 2017 you have 18 pages of results – 349 decisions – to read through.
Of those 349 decisions, just 75 complaints made by a claims management company were upheld.
So, less than a quarter of complaints ambulance chasers made on behalf of people were actually deemed legitimate and worthy of compensation by the Financial Ombudsman Service.