Any claims management company (CMC) working on the basis that submitting a claim is a completely no-lose situation would do well to note some recent cases involving independent financial advisers (IFAs).

Alan Lakey, partner at Hertfordshire-based Highclere Financial Services, received a payment protection insurance (PPI) complaint from Lancashire-based CMC Aims Reclaim. The complaint alleged seven things Mr Lakey had failed to do when selling PPI to a particular client. This particularly angered Mr Lakey as he claims never to have sold PPI, and he added that the client in question said they had never submitted a complaint via Aims Reclaim.

Mr Lakey’s response was to send the CMC a bill of £100 for the 40 minutes of his time required to deal with their enquiry. He says that the amount was calculated on the same basis as the hourly rate advice fees he charges to his clients. When Aims Reclaim did not pay, Mr Lakey took the matter to the small claims court, and in October 2013, a judge at Accrington Crown Court found in favour of Mr Lakey, saying that the CMC had a duty to establish that there were reasonable grounds for a claim before submitting it. Aims Reclaim was ordered to pay Mr Lakey’s £100 claim plus £240.20 in costs.

Mr Lakey, an outspoken member of the IFA community, has described CMCs as “akin to the biblical plague of locusts.” He extensively lobbied Kenneth Clarke MP when Mr Clarke was Secretary of State for Justice, and managed to secure a personal meeting with representatives of the Claims Management Regulator. Speaking about this case, he commented: “The judge’s decision confirms claims firms cannot recklessly level accusations about events that did not take place. Further, they cannot make allegations the client has not made or was not even aware of.”

A Yorkshire-based IFA has asked a CMC to pay a larger sum of £3,861. Neil Liversidge, managing director of West Riding Personal Financial Solutions, received a complaint from Hampshire-based CMC Money Claims (UK) Ltd alleging failures in the sale of an interest-only mortgage policy. Unlike in the case of Mr Lakey, Mr Liversidge accepts that his company sold the product in question, but disputes the CMC’s central claim that he did not explain that a separate repayment vehicle would be required to repay the capital balance.

Mr Liversidge, who is a member of the ruling council of trade body the Association of Professional Financial Advisers, 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. He notes that, after he rejected the complaint, that the matter was not referred to the Financial Ombudsman Service.

Money Claims is yet to reply to Mr Liversidge, and it remains to be seen if this matter will also reach court.

In November 2013, the Claims Management Regulator announced proposals for new conduct rules, under which CMCs will need to establish that claims have a realistic chance of success before submitting them, and will be subject to new obligations to provide evidence to back up claims.