FOS must level mis selling playing field
Under present FOS rules Claims Management Companies can submit an unlimited amount of claims without the fear of censure.
Goldsmith said brokers are now becoming anxious mischievous claims with no foundation becoming a significant distraction in terms of man power and cost.
He said: “We’ve noticed a pattern and this has, if anything heightened our concerns about how these claims will impact upon brokers and lenders.
“Some CMCs are, as a matter of practice, pursuing claims no matter how tenuous the grounds and if their claim is not addressed by the lender or broker they are then referring that claim to the Financial Ombudsman Service (FOS).
“So lenders and brokers, mindful of the risk that these claims could ultimately be referred on by the CMCs to FOS, find themselves with no option but to invest significant time and effort in investigating and refuting these claims.
“I’m sure that the FOS limit of 25 free referred claims preys on the minds of the lenders and brokers alike as they reluctantly decide to spend this time dealing with these claims – no matter how spurious.”
Goldsmith said he believes that the fact that there is no financial penalty for either CMC or claimant has resulted in a surge in speculative claims.
Goldsmith continued: “Coming from a profession where we would face a financial penalty for any cases referred to the Legal Ombudsman and found against us I can appreciate the frustrations that the Lenders and Brokers are experiencing when faced with a high volume of speculative, mischievous claims.
“That’s why I’m calling on FOS to review their practices. The CMCs and claimants submitting these mischievous claims should face some consequence if their claim is shown to be without substance – only then will such claims reduce and this distraction for brokers and lenders alike diminish.”