The Association of Professional Financial Advisers (APFA) wants the regulator to get tougher with the claims management industry.
APFA has published a paper which backs Government’s proposals to introduce new maximum fees that claims management companies (CMCs) can charge their clients. The paper is in response to the Ministry of Justice’s consultation on Claims Management Regulation. APFA supports the government’s goal to protect consumers from high charges and reduce the number of speculative claims.
The APFA also says that more should be done to help people. This includes a tightening of the rules and tougher enforcement action by the regulator. What’s more, the ban on CMCs taking any fees where no relationship is found between a consumer and a firm, should not be limited to complaints about payment protection insurance and packaged bank account mis-selling, but should be extended to all claims. There should also be a ban on cancellation fees during cooling off periods and in order to discourage spurious claims, CMCs should be required to pay a fee when submitting a complaint to FOS, which can then be refunded if the claim is legitimate.
APFA’s Director General Chris Hannant said: “We welcome the proposals in this consultation paper, which together with the changes recommended in the recent Carol Brady Review, will go some way in addressing the problems in the claims management industry.
“We are however increasingly concerned about speculative or false claims. Our members regularly report cases where they have received claims which upon investigation, proved to be unsubstantiated. Such claims amount to a costly and time-consuming burden for firms and consumers. If CMCs were made to pay a fee when submitting a claim to FOS, refundable if the claim is legitimate, this would go some way to discourage vexatious claims, without causing any consumer detriment.”