A number of IFAs say they are being unfairly targeted by CMCs for allegedly mis-selling products including mortgage endowments and health insurance policies.
It follows a rise in the number of consumers using CMCs as a result of the mass mis-selling of payment protection insurance (PPI).
But advisers say the MoJ, which regulates CMCs, is failing to protect them from “unwarranted” claims.
Alan Lakey, partner at Highclere Financial Services, lodged a complaint with the MoJ in November 2011 against Devon-based claims manager EMC Advisory Services (EMCAS).
EMCAS had made a number of allegations, apparently on behalf of two clients advised by Lakey, regarding a Clerical Medical endowment policy.
They included that the policy was unsuitable; that no attitude to risk was undertaken; and that the client was led to believe the policy would be used to pay off the mortgage loan.
However, Lakey said the clients subsequently confirmed they had made no such claims. Instead, Lakey said, they had been advised by Nationwide Building Society, where they had an account, to allow EMCAS to investigate the possibility of a claim.
In correspondence with the MoJ following his complaint, Lakey was told it could only investigate if the clients complained to it directly.
The organisation also mistakenly filed Lakey’s original complaint as being about PPI, even though it made no mention of it.
“It’s madness,” Lakey said. “I only want them to deal with this in a proper manner because I am the victim, but they said only the client could complain!”
Lakey has now written to secretary of state for Justice, Kenneth Clarke MP, asking him to look into the matter.
He said CMCs were using aggressive tactics in order to frighten advisers into early settlements.
“Had I been weak-minded or not had the correct files, I might have been paying out,” he said.
Meanwhile, Michael Both, a partner at Michael Phillips, said he was unfairly contacted by another claims manager which no longer features on the list of MoJ-approved firms.
He said the CMC was making a standard accusation: that he had a client with an endowment, so it “must have been mis-sold”.
“We investigated the claim, which was clearly unfounded. But it [the CMC] told us from the start that if we didn’t roll over, it would cost us an awful lot of time and money.
“If it wasn’t so serious it would be funny. When clients have been mis-sold they should be compensated, but the fact is we are always pilloried as the bad people.
“It puts premiums up and makes the general public pay out more. For insurance companies it’s cheaper to pay the claim than to fight it.”
A spokesperson from EMCAS said no cases were investigated without written permission.
“Given our years of experience in handling claims, where a product provider informs us an IFA is involved in the sale we will review the claim based on our past experience of the business,” she said.
“Where we know that IFAs have robust processes and give good advice we will advise our clients that we, in our professional opinion, do not feel their claim will be successful and that we will close our file.
“From time to time we are bound to be talking to IFA customers. If that prompts them to talk to their IFAs about the issue then so much the better – we don’t mind how consumers get redress in mis-selling cases, but we do want them to get it.”
