The Financial Ombudsman Service has ruled in favour of a financial adviser who faced a claim for alleged mis-selling of payment protection insurance (PPI).
Andrew Oliver, director of financial advice firm Andrew Oliver & Co, was first contacted by claims management company The Protection Specialist Ltd, trading as The Fair Trade Practice, in April 2018 on behalf of a former client who claimed he had been mis-sold a PPI policy 11 years ago.
Mr Oliver said he followed the prescribed regulatory process for dealing with a complaint, and went back through the files to prove his firm had never arranged PPI cover and the policy was in fact a standalone accident and sickness product which had not been mis-sold.
Mr Oliver dismissed the claim for compensation and sent the claims management company a £300 bill for allegedly wasting his time, to which he received a "prompt" reply stating no contract had ever existed between the two parties and therefore no money was owed.
In the following weeks Mr Oliver learned the complaint had been escalated to the Fos, the first he had faced in 20 years as an IFA.
But in a decision last December the Ombudsman ruled in favour of Mr Oliver and found the policy had not been mis-sold - although it still judged the product as PPI, something Mr Oliver maintains it was not.
In its original complaint against Mr Oliver, the claims management company had asked the case of Plevin v Paragon Personal Finance be considered. In this the Supreme Court had ruled failure to disclose a large commission payment on a single PPI policy was unfair.
However, the ombudsman ruled as the Plevin case addressed the standards required of lenders it "did not make a difference" to the client's complaint.
Mr Oliver claimed that The Fair Trade Practice had failed to offer any reasoning in the initial complaint as to why it felt the policy had been mis-sold.
He said: "As a result of the claims management company not properly investigating the circumstances of this case before pursuing a complaint they wasted the client's time, our time and that of Fos to which there is a financial cost and I feel damaged the image of those claims management companies who do act professionally.
"The approach taken was no better than throwing spaghetti at the wall and to see what sticks."
Mr Oliver said the claims management company should have known the Plevin case was not applicable if it had "properly investigated" the case.
A spokesperson for The Fair Trade Practice said: "We provided the necessary substantiation to support the client’s right to express their concerns that they may have been mis-sold payment protection insurance.
"The Financial Ombudsman, having reviewed all of the information, decided that the insurance was not mis-sold. We, on behalf of the client, have accepted the Ombudsman’s ruling and have closed our file."
Simon Evans, chief executive of the Alliance of Claims Companies (ACC), when initially asked to comment on Mr Oliver's allegations last year, said he would be "disappointed" if the claims management company involved were a member of the alliance.
However, it is stated on The Fair Trade Practice's website that the company is a "founding member" of the ACC.
When approached for comment on this update, Mr Evans said: "Having spoken to the CMC involved, who provided me with an overview of the case, I am wholly satisfied they did everything they could to help their customer in line with all regulatory requirements as identified in CAPR – in particular Principle 2 of the General Rules."
Principle 2 of the General Rules states a business shall take all "reasonable steps to investigate the existence and merits of each element of a potential claim before presenting it to a third party" and make representations to a third party that "substantiate and evidence the basis of the claim".
Mr Evans added: "The ACC does indeed take seriously the adherence to its guiding principles by members, and also seeks assurances from members that they are working in line with them. I do not believe that there is an issue here in relation to that."
rachel.addison@ft.com
