Financial Guidance and Claims Bill [HL]

Written evidence submitted by the Professional Financial Claims Association (PFCA) (FGCB27)

Submission of written evidence: Financial Guidance and Claims Bill (Part 2) Public Bill Committee.

Change of Regulator – Financial Conduct Authority

The Professional Financial Claims Association (PFCA) and individual  member companies are working with the FCA transition team to assist in the period before it assumes the role of regulator of those financial claims management companies (FCMCs) currently regulated by the Claims Management Regulator (CMR). When this transition is complete there will be a consolidation within the sector as the FCA imposes its significant powers and demands for more accountability, the PFCA welcomes this. The PFCA will continue to work closely with the CMR until the transition is complete.

The PFCA and Fee Cap – Response to the CMR

In its response to the Claims Management Regulator’s Consultation,  "Cutting the Costs for Consumers –financial claims" February 2016;  the PFCA made its position clear in a comprehensive, evidence based response which considered the proposal based upon the information and statistical data presented.  Any future fee caps must be set at a level which is based upon sound statistical information and facts to avoid the closure of many professional firms who will be unable to provide their services to consumers. 

Data and Claims managed by members provides evidence

Claims handling process data provided by all members has proved to be invaluable to Nick Baxter, independent chairman, when addressing matters which result in consumer detriment. The PFCA currently has over 295,000 live PPI claims under management, this and historic data has enabled such respected media as the Financial Times, BBC TV, Radio and others to publish facts and assist in bringing poor claims handling issues and Consumer detriment to the fore.

Mis-sold PPI £100bn to be repaid – Provisions = £40bn, why? *

It is undisputed that there is a long way to go before those who mis-sold PPI repay the £100bn in premiums and interest. To date there has only been £14.4bn in mis-sold PPI premiums repaid to consumers, the gross amount as recorded by the FCA is £28.8bn which includes approximately 50% Statutory Interest and Account Interest. This discrepancy was reported in the Financial Times, Emma Dunkley, 4th April 2016; following receipt of PFCA evidence which was also supported independently by "senior bankers".

The FCA "PPI deadline awareness campaign" is a failure

Independent surveys* carried out by Populus on behalf of the PFCA, show a lot of attitudes haven’t changed since the initial Fee Cap Consultation in 2016; support for the existence of FCMCs remains high. A more recent survey following the extensive FCA "PPI deadline awareness" campaign shows knowledge of the PPI deadline remains low. Half of UK adults questioned either don’t know the date of the deadline or were unaware that such a deadline had been set. Nearly half (47%) support the idea of an extension in the deadline for PPI repayments.  Just under one in five (18%) disagree.  There’s a big group of the population who don’t have a view.

Banks mis-sold PPI and have been fined £100s millions for obstructing claims processing

Claims Management Sector – how it is made up: CMCs – FCMCs

It is noted from Hansard records of the FGCB that debates in both Houses and opinions of some who comment may be misunderstanding key points. The CMR regulates both CMCs and FCMCs; the most recent figures have fallen to a total of 1,308; 53% of these operate in the Personal Injury sector and 49% in the financial products and services sector. It should also be noted that of the total FCMCs, many are authorised to carry out an ‘introducer’ role and have no Client contact. There are now just over 100 active FCMCs who process financial claims.

"Cold Calling" dispelling the perception

The action of Cold Calling is already prohibited under ‘Privacy and Electronic Communications Regulations’ and the PFCA Code of Practice which also prohibits SMS marketing; so banning an already prohibited action will not solve the issue.  Many FCMCs operate a Direct Response model; however, those firms who do use Consumer Data are required to ensure consent has been granted, albeit, many consumers are unaware as to when or how they may have given this.

Consumers want and need ‘Access to Justice’

The "law of unintended consequences" may see many rogue firms reducing Training, Monitoring, Compliance and Customer Service. Consumers will be denied ‘Access to Justice’ as FCMCs struggle to work to a fee cap. Three in four UK adults believe they should have the option of professional services to assist in reclaiming mis-sold PPI*.

About the PFCA:

The Professional Financial Claims Association (PFCA) was founded by some of the UK’s leading financial claims management companies (CMCs) in 2013. This followed a consultation period with the Claims Management Regulator (CMR), Sir Mark Boleat, industry trade bodies, other associations, consumer groups’ including, Which? and experts in the field of financial services. It was clear during this period of consultation there was a desire for more accountability and adherence with CMR regulation which would help raise standards within the financial claims management sector, also to highlight poor practices and ensure that those who do continually work towards higher standards of consumer care were recognised. The PFCA acknowledged that it would not represent all such firms, however, it welcomed open dialogue with firms and other parties interested in restoring faith and confidence within the sector. This it continues to do.

High standards and independent accountability

Key to raising the bar and compliance with CMR regulation the PFCA, following consultation, published its own Code of Practice (COP) which has 54 enhancements to current required regulation.  Compliance with this COP is ensured with both new membership Audits and annual member Audits.  These are carried out by Rockstead , an independent asset, business, process and review company. T his requirement for new members has often prov ed to be a barrier to entry for membership.

A respected ‘Voice’

The PFCA is a respected ‘voice’ within the industry; it is consulted on matters of change by the CMR with whom it maintains regular open communication on numerous matters. It is also an active and recognised member of the CMR’s Regulatory Consultative Group and also engages with the FCA, including the FCA’s regulatory transition team. The PFCA was a significant participant in the response to the CMR when it responded to and consulted on "Cutting the costs for consumers – financial claims" this is demonstrated in the CMR’s Consultation Response (16th November 2017) as part of the proposed amendments to the Financial Guidance and Claims Bill.

*Independent Survey - Populus:

Mis-sold PPI £100bn to be repaid:

February 2018


Prepared 6th February 2018