Personal Finance Society uncovers poor CMC practice

The Personal Finance Society (PFS) announced that it has received 40 complaints about the conduct of claims management companies (CMCs) in less than a week.

The financial body uncovered evidence of CMCs issuing blanket calls for cash, and escalating complaints to the Financial Ombudsman Service despite financial advisers having evidence they were without foundation.

The PFS reported that one adviser had evidence of a CMC issuing blanket complaints on annuity sales on behalf of clients, without checking whether any of the alleged claims even applied in the client's case.

The adviser, who wished to remain anonymous, told the PFS: “The CMCs should be required to provide evidence of what they allege as they waste so much time without any responsibility for their allegations.”

In another case, an adviser was able to show a CMC how their client was financially better off because of their recommendation, but despite this evidence, the CMC still referred the complaint to the Financial Ombudsman Service, which concluded the advice was suitable.

Personal Finance Society chief executive, Keith Richards, commented: “CMCs claiming their work is ‘no win, no fee’ are misleading and this sort of practice needs banning. The cost of poor practices at a minority of CMCs also impacts public trust and pushes up the cost of financial advice.

“Financial advisers are understandably unhappy at CMCs that throw mud at walls in the hope that some will stick face no financial penalty when they fail to win a claim. It is clear that financial advisers don’t want CMCs to earn the cream they skim off their wins by becoming more circumspect in their filtering of legitimate claims.

“The PFS will share the evidence uncovered of poor practices at CMCs with the FCA, and flag how the current system is unfair and results in consumers picking up the tab for claims without foundation.”

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