Advisers taking on claims management companies

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“There’s a requirement for any business to keep records for six years,” Bradley said. “Some IFA firms may keep them considerably longer but, when you do keep them for longer, you start to fall into difficult places with the Data Protection Act.

“You can’t keep them unless you have a good reason, and a good reason is not someone making a complaint.” The lack of a long-stop makes cases even more difficult to defend.

Bradley and Lakey proposed a solution to the MoJ: remove from FOS jurisdiction any CMC-managed claim and place the resolution within the court system, in effect treating a complaint in the same way as a case that has gone to litigation – outside FOS jurisdiction.

Whether the regulator goes for that remains to be seen, but it appears the MoJ is prepared to move on a number of other concerns.  The cost of setting up a CMC, at £950, is something the MoJ admitted was far too low. The difficulties of regulating a mushrooming industry are also apparent.

Consumers

“There’s not a rigorous process at the MoJ to prevent [rogue firms] from surfacing elsewhere,” Bradley said. “They just create a new company with their friend or wife and get round it.”

Lakey and Bradley’s meeting forms part of a much wider debate: consumers are as exasperated as advisers when they receive unsolicited phone calls about payment protection insurance and endowment mis-selling, and there are plenty of MPs fighting their case.  But for advisers, Bradley and Lakey could present them with their greatest hope.

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