June 2020

June 2020

  

FCA Authorisation of CMCs

The regulation and authorisation of CMCs is handled within the Supervision - Retail & Authorisations Business Unit within the FCA. There are around 50 members of staff, including five managers, that work wholly on the regulation and authorisation of CMCs. Of the 130 CMC’s listed by the Claims Management Regulator in 2019 as operating in the high cost credit sector, since regulation by the FCA in April 2019, 82 are no longer trading, 28 hold temporary permissions and 20 have full authorisation. It is clear that the FCA is leaving many with temporary permission for the time being.

 

We Fight Any Claim received full authorisation on 15th April but requirements state the company is winding up its PPI claims activity. The company had re branded as the WePlanGroup which offers other services including debt management, IVA’s and will writing.  However, WePlanGroup has taken the decision to close its doors for a period and cannot indicate when it will be back up and running.

 

Compi Claims received full authorisation on 24th April but its website is as yet under construction.

 

Money Management Team Ltd gained full authorisation on 12th May.  Its website only deals with payday loan claims.  The directors, Anthony Chorlton and Lisa O’Neill are former directors of Gladstone Brookes. Lisa O’Neill, was listed as the 100% owner of Warrington-based Gladstone Brookes, which boasted on its website last year that it has recovered more than £1 billion for customers. The company earned a 20% commission from every PPI payment, which suggested a fees bonanza worth around £200 million.

 

Fast Track Reclaim

Fast Track Reclaim is a trading name of Quickly Finance Ltd and is another FCA authorised CMC with poor customer reviews on Trustpilot. Of 263 Trust Pilot reviews, 67% of them describe the company as Poor or Bad. Customers of the CMC have referred to demanding texts and emails which threaten court action if fees are not paid.

 

A further consumer concern is the cost of the fees, as one reviewer says;

“Fees probably a bit steep at 24% I originally thought it was 20% of claim before Tax on interest is calculated.  This would be my main gripe the Fee should only be levied on what you actually receive in compensation not on amount before Tax on interest deducted so you actually end up paying more than 24% in fees of what you receive.”

 

First Claims Group Ltd

First Claims Group Ltd had connections with the dubious and now defunct CMC, Direct Financial Claims Ltd.  According to the FCA Register, the current status of First Claims Group Ltd is lapsed, so it is a surprise that its website remains live. It claims an FCA number of 833653 which actually belongs to Direct Financial Claims Ltd whose licence lapsed in September 2019. First Claims Group Ltd was purportedly winding down its CMC business as shown on the FCA register, and would not be taking on any new business from 7th December 2019.

May 20

Jonathan Allweis

The Solicitors Disciplinary Tribunal has taken the unusual step of rejecting an agreement between the Solicitors Regulation Authority and a solicitor who broke the rules through his involvement with flight delay compensation claims. The SDT said Jonathan Allweis allowed CMCs to make claims in the firm’s name and use its client account as a banking facility to handle compensation payments. He agreed to be fined £25,000, which the tribunal accepted last November, but it did not agree with Mr Allweis and the SRA that he should be allowed to continue in the compliance officer for legal practice and compliance officer for finance and administration roles. The SDT said his misconduct resulted in a large sum of money being held in such a way that approximately 4,000 clients could not be identified over a number of years. This meant there were clear risks to the clients’ funds in the event of insolvency or other accounting problems. The role of COLP and COFA was a fundamental part of protections put in place to safeguard client monies and for this reason the tribunal refused to approve the SRA agreement.

 

Mr Allweis was fined for his role in using CMC’s for flight delay compensation claims via the CMC, Connected Claims.  This was run by a Rahul Sharma (and before that, Shaun Pemberton of Sanderson Drake). Rahul Dev Sharma becomes the third director of the debt management company Debt Connect (UK) Ltd to be disqualified.  The company was bought by Allay Claims but a recent review on Trust Pilot suggested Rahul Sharma remained on as a shadow director.

April 2020

Decider

A Resolver Group company is marketing an Online Dispute Resolution platform called Decider which, it claims, is being used by Open Banking, Ombudsman Services, the Traffic Penalty Tribunal and other Alternative Dispute Resolution providers.  It aims to simplify how organisations evaluate, mediate and arbitrate on disputes by providing a dynamic case management system that unlocks organisational efficiencies, helps deliver significant cost reductions and optimises the online experience for users. But how it could be used for a generalisation such as Open Banking is unclear.

 

Resolver has a chequered organisational history. Resolver, the free consumer complaints service recommended by Martin Lewis, founder of MoneySavingExpert.com is working with MoneySavingExpert.com, the UK's biggest consumer advice website, bringing together its campaigning power with Resolver's focus on helping consumers raise and resolve issues, it says. Interestingly, Resolving Ltd (the legal entity) which claimed not to be a Claims Management Company, was authorised by the Claims Management Regulator on 19th March 2019, just days before CMCs become regulated by the FCA. But it did not apply to the FCA for authorisation, instead, changed the legal entity behind it.

 

The company initially behind Resolver was Resolving Ltd whose CMC licence lapsed in August 2019. There was also Resolving UK Ltd (same directors as Resolving Ltd) where Richard Lloyd (now an NED on the FCA Board) resigned as a director in April 2019. Resolver Consumer Online Ltd (some new directors, but two from the previous companies) is now running Resolver and was incorporated in March 2019.  Resolving Ltd is listed as the majority shareholder. The online privacy policy refers to the Resolver Group and the T&C’s confirm its partnership with Money Saving Expert, but it is not FCA authorised.

 

Essentially, Resolver was operating as a CMC and obtained a licence from the Claims Management Regulator just before the FCA took over regulation of CMCs on 1st April 2019. But Resolver had always claimed not to be a CMC yet its automated processes appeared to fit the FCA definition. It seems that a new version of Resolver has quietly emerged, run by a new company, that is attempting to operate in a manner that falls outside the definition of a CMC. The revised iteration is a lot less campaigning in its stance, describing itself now as a free, independent issue resolution service that connects consumers with businesses around the world, helping them find the best outcome every time. Now, the Resolving Group is clearly a commercial operation – helping consumers make complaints for free clearly did not pay, so now is now trying to sell an online dispute resolution system.

 

Secure Compliance Ltd

Meanwhile, Secure Compliance Ltd based in Lutterworth, Leicestershire had also gained full FCA authorisation, on 23rd January, but applied to cancel this on 3rd March. It has to continue to meet FCA standards in dealing with its existing customers.

 

 

Broadway Solicitors

A personal injury solicitor put his own interests ahead of his clients, turning a Nelsonian blind eye when concerns were raised so as to maintain the flow of referrals from claims companies. Farooq Rafiq was struck off for multiple breaches of the rules and also following three convictions for assault – one committed while he was on bail for the other two. The Solicitors Disciplinary Tribunal heard that Mr Rafiq, born in 1984, qualified in 2009 and from 2011 was a partner at Broadway Solicitors in Oldham before it incorporated as Broadway Legal in 2016 and he became the sole director. The Solicitors Regulation Authority closed down the firm in November 2018. The tribunal considered that the totality of the respondent’s conduct was such that allowing the respondent’s name to remain on the roll would have an adverse effect on public confidence in the reputation of the profession. Mr Rafiq was also ordered to pay agreed costs of £55,000.

 

He admitted that Broadway was financially dependent on receiving clients from claims management companies – who were responsible for 97% of the firm’s clients – and did not advise clients that paying fees to the CMCs may well not have been in their best interests. When issues were brought to his attention, he did very little to remedy or rectify those issues. He had repeatedly and consistently subordinated the interests of his clients for his own interests and that of the firm.

March 2020

FS Claims

The FCA has refused to authorise CMC FS Claims after it raised concerns about how defined benefit file reviews were checked. In a final notice published on 29th January  the FCA said it had chased FS Claims Ltd with four letters, and numerous emails and telephone calls over a six week period last summer with a sizeable list of concerns about FS Claims' business plan and practice, which the FCA asked for more information about as part of its authorisation process.

 

The FCA's requests also included the company's vulnerable client policy, details of how it would ensure the security of client money and monthly cash flow and profit and loss calculations. Over the course of several months the company requested extensions to the regulator's deadlines, claiming relevant employees were on annual leave and a change in compliance support, but ultimately failed to provide any of the necessary information.

 

FS Claims applied for FCA Authorisation on 27th April 2019 but was given a warning notice on 29th November followed by a Decision Notice on the 29th December.  The CMC then had 28 days to appeal, but did not do so.  Its application was refused and the details were placed on the FCA website on 4th February.

 

 

Harlington Law

Kabir Khan, who runs Luton law firm Harlington Law, has been rebuked by the SRA for taking holiday sickness leads from unregulated claims management companies. He will not be referred to the Solicitors Disciplinary Tribunal.

 

A regulatory settlement agreement published on 4th February recorded that in November 2016 Mr Khan contracted with two companies to carry out marketing activities and refer potential personal injury claims, but he did not check whether they were authorised by the Claims Management Regulator. He accepted 202 referrals in relation to holiday sickness claims from the companies over a period of five months, but he did not pay for them because the CMCs became insolvent.

 

The SRA found that Mr Khan was reckless as to the risk of harm posed by these unregulated companies, and his conduct persisted longer than was reasonable, with Mr Khan only taking remedial action when prompted. He admitted failing to carry out his role as sole principal of Harlington Law effectively, in breach of principle 8 of the SRA Principles 2011.

 

 

Allay Claims Ltd

Allay Claims Ltd was FCA authorised on 11th February, but with restrictions on its licence. Allay is not to publish any financial promotions unless they have been certified as compliant by a specified third party. The FCA will consent to the removal of this requirement not earlier than 2 months after 7th February, and after Allay has satisfied the Authority that it is meeting and will continue to meet its standards.

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