Kevin Paterson is sales and marketing director of Assurant Intermediary
Shakespeare famously wrote “The smallest worm will turn being trodden on” in Henry VI, Part 3.
News that that brokers are now looking to take legal action against individuals who make spurious mortgage payment protection insurance mis-selling claims is perhaps an example of this.
The latest Ombudsman’s News published by the Financial Ombudsman Service on 2nd August shows that the volume of payment protection insurance complaints has quadrupled in the last year. The FOS received 56,025 new PPI cases in the quarter ending June 2011. This figure compares to just 13,520 new PPI cases in the same period last year.
It’s been well documented that there have been some clear cases of mis-selling by the financial services sector in the past, so it’s not surprising that the newsletter reveals that roughly half of the cases were resolved in favour of the consumer. And while the decision by the major banks to comply with the Financial Services Authority’s ruling on the handling of PPI claims.
However, one of the downsides has been the avalanche of marketing by ‘ambulance chasing’ claims management firms offering to help consumers obtain compensation if they were mis-sold their policy. How many of us haven’t seen an ad, got something through the post or - even more annoyingly - had several texts on the subject?
Given the deluge of complaints and the involvement of the ambulance chasers, it’s not surprising that a number of allegations are unfounded - but the cost to brokers of fighting spurious claims both in terms of the time involved as well as the impact on bottom line is significant let alone the threat to their reputation.
According to the FOS, only around one in six of initial complaints and enquiries it receives go on to require more detailed consideration work by its adjudicators or ombudsmen. It does not charge a business for the first three cases it deals with during a financial year. For the fourth and each subsequent complaint, it charges a case fee of £500.
Brokers in both the mortgage and general insurance sectors are being hit hard by the previous unscrupulous activities of others, having to pay out to defend unfounded claims or cope with enormous increases in their Financial Services Compensation Scheme levy. Those mortgage brokers that choose to stand up and defend the faultless advice and service they have provided their clients over the years should be applauded and I truly hope that the Association of Mortgage Intermediaries is successful in its lobbying of the Ministry of Justice.
