The FCA must bare its teeth to the other sharks out there!
There are other sharks out there so the FCA must bare its teeth when it becomes responsible for the claims management industry.
The Sunday Times article at the weekend reported on claims management company, Payday Refunds hiring a consultant, Mark Kennedy who had been disqualified by the FCA for fleecing approximately 124,000 payday loan customers out of £7.2 million by duping them into believing they had been approved for short term loans.
The FCA found that between November 2013 and July 2014 all the 4 directors of Secure My Money Ltd (Mark Robert Kennedy, David James Carter Mullins, Edward John Booth and Christopher Paul Brotheron) “lacked honesty and integrity as they had deliberately misled often vulnerable customers, in relation to fees and services provided through web-based brands i-loansdirect, LoanZoo and the1loan”. In July 2018, The FCA issued a notice confirming that all directors had been disqualified and Mark Kennedy was prohibited from
performing any function in relation to any regulated activities carried on by an
authorised or exempt person, or exempt professional firm for 8 years.
So this raises the question, why would a claims management company specialising in payday loan refunds subsequently employ such a person even as a ‘consultant’, although the Times also reports he has “a financial stake in Payday Refunds through an investment vehicle, D4C Ventures, according to documents filed at Companies House.” And why wasn’t this information previously picked up by the Claims Management Regulator?
The article reports that Payday Refunds submitted 2,138 new cases to the Financial Services Ombudsman in the first half of the year - an extraordinary amount which supports the experiences of Wonga who collapsed after suffering a deluge of compensation claims. But how many of these claims are genuine or are merely just templated submissions by a company who “appears to have a low proof threshold before initiating a claim against the target company”
And what are the regulators doing about it? A deluge of spurious claims takes up time and effort of both firms and Financial Ombudsman Service staff and presents the obvious danger that some claims may get through without adequate validation. So why isn’t FOS doing something to reject bogus unverified complaints in the first instance?
The Claims Management Regulator seem to be biding its time until the FCA take over the regulation of the claims industry next year. On 9th August the Claims Management Regulator published details of its enforcement actions between April and June 2018. It conducted 112 visits, conducted 81 audits and issued 39 warnings. It cancelled 13 licences. During the period the CMR received over 127 reports of businesses conducting claims management activity without authorisation, but only 12 warnings were issued to businesses requiring them immediately to cease claims management activity or be subject to further enforcement action.
It will be up to the FCA to bare its teeth and undertake serious scrutiny of all CMC’s before awarding them with authorisation. This clearly needs to include extensive and sufficient background checks so the industry is cleansed of any dubious company and dubious claims.