6th September 2011

A cunning plan indeed Baldrick

No doubt the Financial Services industry had to blink several times when it saw the headline ‘Trade body for financial claims firms launches’.

If ever there was a clearer example of a trade body dressed in the guise of a regulatory attention deflection device, this is it. I am minded to think of past trade bodies such as those for Estate agents, Petrol Retailers, Motor Traders and others, all can work well if they do what they say on the can, sadly though they often do not. But in this case, are the lunatics about to run the Asylum, after all there are two trade bodies jockeying for position who are not exactly in harmony?

On reading the code of conduct, this simply beggars belief. This is an industry whose foundations are built upon the potential of hope coupled with a sense of entitlement, with the mortar of sometime connivance or deceit- and often with a view to obtaining significant pecuniary advantage at considerable cost to the ‘Patsy’ that goes along with it. Indeed some in the industry may hold the view that the Claims Management industry is another version of a ‘Boiler room’ scam, cold calling accident victims telling them that riches await and are only a phone call away.

What is needed here is not a trade body but Regulation with a very big ‘R’ from the FSA or FCA with complaints being dealt with by the FOS. So, is the Association of Professional Claims Managers a way of heading of the possibility of Draconian regulation by statute?

Although claiming that such firms are subject to regulation by the MoJ, the perception is not matched too much by the reality. The MoJ is seen in many quarters as a soft touch and although they have struck off a number of firms, the fact that the firms in question even contemplated the actions that resulted in their being struck off says a lot about the Blackadder world they operate in.

Who thought up this cunning plan? The Association of Professional Claims Managers, has been founded by Brunel Franklin, Gladstone Brookes, We Claim U Gain, Financial Recovery Solutions and Synergy Financial Solutions, only time will tell who is Baldrick, Melchett, Lord Flashheart, George and Blackadder?

A trade body by its very nature should do what it says on the can. It does not sit comfortably with statements such as “to promote the highest standards of professionalism within the claims management industry- that is what a Professional body does, or “to assess new applicants’ fitness for membership” that is what a regulator should do, or “monitor and assess all members’ compliance with the APCM Code of Practice, on an on-going basis” as again that is what a regulator should do.

Although some aspects of the code recognise the need to put the brakes on some of the actions of the less scrupulous firms, I am not sure what teeth it has as removing them from the ‘Club” does not stop them trading as I see it.

The proposed code states “Breaches of the Code will be dealt with by the Disciplinary Committee. Wherever possible, member firms will be given a specified period of time in which to resolve any breaches. However, the Disciplinary Committee ultimately has the power to terminate the membership where a member has failed to adhere to the Code or address breaches in a timely manner”. So what happens then? As long as the MOJ continues to regulate the firm I can only assume it is business as usual.

This is a very big industry, it is legal, and it involves legal firms who are regulated. But it feeds off some of the very worst aspects of human nature.

Firms who promote their services by way of ‘Handy calculators” really do not help the perception of a professional image. It may be that statements such as  “These amounts are accepted as the standard guidelines for awarding compensation and you should be wary of any company that promises you more than is shown here” is the claims industry version of ‘the value of your investment may go up or down and is not guaranteed”?

The industries marketing activity is focused on a culture that encourages the  ‘collection of money as you pass go’, in many cases for a loss or injury that may be exaggerated or in some cases has not actually happened. I have personal experience in that regard following a car accident.

Unlike other industries, Financial Services has a body to deal with such matters. And that body, the FOS, is not best pleased about some of the activities of these firms.

A way of putting the brakes on could be easily found by the provision of updating MoJ rules so that such firms would not be able to solicit or act on claims where an Ombudsman scheme exists and the complaint has not already been investigated and adjudicated upon by that Ombudsman.

Remember, although IFAs are bound by FOS decisions, consumers are not and any resort to court action would come at a financial cost to consumers and the Claims firms both pre and post judgment, especially if they lost.

FSA/FCA, Panacea Comment