The CMC trade body has called on advisers and providers to engage with claims management companies for the benefit of consumers.
Simon Evans, chief executive of the Alliance of Claims Companies, told FTAdviser it made “economical and commercial” sense for the financial services industry to work together to tackle bad practice in any form, adding he was “certain” advisers and CMCs could achieve more together.
He added: “It’s just common sense that there should be close engagement and we should work together for the benefit of everyone.
“When trade bodies and financial services sectors clash, the one who loses out is the consumer.”
Mr Evans pointed out the ACC had reported bad practice from CMCs to the Financial Conduct Authority before, adding that those skirting around their regulatory obligations would get “taken out”.
His comments come after the Personal Finance Society announced it was to embark on a campaign to “weed out rogue ambulance chasers” last week (January 14).
The PFS’s chief executive Keith Richards had urged advisers to provide information on any individual CMCs they suspected of bad practice.
Mr Evans said: “It is by using pejorative language in throwaway comments that the most damage is done as consumers lose trust in the entire sector, and that cannot be allowed to happen.
“Work with us to ensure the consumer is best served and we will, I am certain, achieve more together in sorting out these issues where they are shown to exist.”
He added members of the ACC were now regulated by the FCA, which meant many were going through the full authorisation process which was “comprehensive, rigorous and robust” and would lead to any firm with issues being denied permissions.
The FCA took over regulation of CMCs last year and has since warned the sector on unacceptable advertising and that low uphold rates could work against the CMC when it comes to authorisation.
The watchdog has also stated CMCs must record all calls they have with clients, a move which the PFS said should make it “relatively simple” to establish if a firm has strayed beyond its permissions.
The ACC has worked closely with the FCA throughout the regulatory handover and sits on the watchdog’s Regulatory Consultative Committee. Mr Evans said he wanted to have a dialogue with the PFS and its members about these issues.
Steve Carlson, chartered financial planner at Carlson Wealth Management, said: “There are lots of people with valid claims, particularly those who have lost most or all of their money through unregulated investments, which were often sold by regulated advisers.
“Now only those with claims management permissions can help these people, so advisers have no choice but to work with CMCs, even though there is a lot of bad practice and blanket spurious claims being made on a no win, no fee basis.”