Claims management companies (CMCs) are advised to review their advertising material to ensure that any statistics included are correct and can be substantiated.
Devon-based CMC EMC Advisory Services Limited, which trades as Emcas, was ordered to clarify a statement on an advertisement which appeared in the Wakefield Express newspaper, which said that one in four clients had been victims of mis-selling.
Emcas has now added a caveat to clarify that this ‘one in four’ statistic refers only to the six retail banks who were the subject of a Financial Services Authority mystery shopping exercise into the quality of their investment advice in February 2013.
This exercise found that in 11% of cases unsuitable advice was given, and in another 15% of cases the bank failed to gather enough information to ensure suitability. 15 % of cases showed that the customer had been recommended an inappropriate product for their attitude to risk.
The banks involved are undertaking a past business review and have agreed to write to customers who may have been mis-sold inviting them to claim compensation.
The ASA has said it believes that the new wording is “unlikely to breach the code.”
The complaint to the ASA was made by Wakefield-based independent financial adviser (IFA) Neil Liversidge. Mr Liversidge, who is a member of the ruling council of the advisers’ trade body, the Association of Professional Financial Advisers (APFA), was concerned that the advert could imply that one in four investment products recommended by IFAs were also unsuitable.
Mr Liversidge said of the ASA’s action: “It’s a small victory. Hopefully through APFA’s prompt action a lot of inconvenience will be avoided for adviser firms who won’t now be tarred with the same brush as the banks.”
This is not the first time that Mr Liversidge has taken action against a CMC. He has asked Hampshire-based CMC Money Claims (UK) to pay his firm, West Riding Personal Financial Solutions, the sum of £3,861 for what he says was an unjustified claim regarding an interest-only mortgage that he recommended. He wants compensation for: the time spent by his personal assistant in scanning documents relevant to the case, the time he spent interviewing the adviser involved in the sale, the time spent writing letters associated with the complaint and the disruption to his family holiday caused by the complaint.
Alan Lakey, partner at Highclere Financial Services, another IFA who has campaigned for stricter controls on CMCs, submitted a complaint about Emcas to their regulator, the Ministry of Justice, in November 2011. He alleged that the clients they were claiming on behalf of in fact did not have a grievance against his firm. This is similar to the case in October 2013, when Mr Lakey won compensation in court from CMC Aims Reclaim after they submitted a false complaint to him regarding the alleged mis-selling of payment protection insurance.
In February 2014, APFA repeated its call for CMCs to pay case fees when they refer complaints to the Financial Ombudsman Service.