Access to Justice in Financial services
Access to Justice in Financial services
Our Current Challenges
Evolution of the industry
Evolution of the industry
Evolution of the industry
The landscape of the claims management industry has changed immeasurably since 2015, and we are changing to reflect that landscape.
Of immediate concern to all those involved in aiding consumer with financial services claims are the proposals contained in the FCA's Consultation Paper CP21/01 published at the end of January 2021.
As more complex financial cases arise, and more organisations seek to aid consumers in their quest for justice, alongside CMCs, it is only right that the trade body evolves to recognise these developments. As the ACC we mainly represented CMCs undertaking PPI claims. This is no longer what either the industry or consumers need, and we are evolving to represent all firms - be they CMCs regulated by the FCA or Legal Firms regulated by the SRA - involved in all aspects of helping consumers in financial claims.
The new landscape can be typically characterised by those claims areas that are most prevalent, such as Plevin Claims, Loans/HCSTC, Mortgages, Packaged Bank Accounts, Pensions, Savings & Investments, Insurance, and other financial claims such as timeshare etc.
As well as FCA regulated CMCs, many SRA regulated legal firms also represent consumers, and many work with CMCs on cases and the relationship is symbiotic as both entities strive to gain access to justice for consumers who have been let down by their financial services provider/adviser.
We now seek to extend our membership to all those involved in consumer redress, across all product types in financial services claims. And the initial challenge is our response to the FCA in regard to their proposals to fee cap the claims landscape, a move that the SRA has indicated it will introduce alongside the FCA rules in the same vein that they did with the PPI fee cap in 2017.
We agree with The Brady Report which stated that 'A well-functioning CMCs market can also act as a check and balance on the conduct and complaint handling processes of businesses, thereby benefitting the public interest.' and we want to ensure that all good CMCs and legal firms undertaking redress can continue to operate effectively and provide consumers with access to justice, provide financial institutions with a reality check and provide regulators with a well-functioning sector.
Yon can see the CRA's response to CP21/1 in the resources page of this site.
The CRA is now working with legal firms as well as member CMCs as they digest and respond to the SRA discussion paper on the matter of fees, which was issued on the 7th July 2021.
The SRA discussion period runs until the 29th September 2021, and the CRA will be submitting a response to this paper in due course.
SRA Discussion on Fees
Evolution of the industry
Evolution of the industry
The Solicitors Regulation Authority (SRA) have published a Discussion Paper as the first stage of the duty placed upon them by the Financial Guidance and Claims Act 2018 (the act) to 'make rules which prevent excessive fees being charged by law firms for all claims management agreements and claims management activities relating to financial products or services'.
In a paper presented to the SRA Board in June the SRA confirmed they intended to 'issue a discussion paper to gather data to inform our approach to meeting the statutory duty (of the act)'.
The board paper also noted that they were not following the FCA and issuing a consultation paper yet because 'a discussion paper rather than a full consultation paper on firm proposals also allows us time to develop an understanding of the scope of the duty that has been placed on us.'
It is clear that the SRA has some work to do in this area, as it noted in the board paper that
- Issuing a discussion paper will allow us to build knowledge and gather information about how law firms operate in the claims management market.
- We understand that only a small number of the c10,500 firms we regulate carry out this work. However we do not routinely collect information about this.
- Our preferred approach is to test the FCA's assumptions and proposals (in CP21/1) and whether the FCA's assumptions and proposals can appropriately be applied to law firms.
The Discussion Paper was subsequently published on the 7th July on the SRA Website - Restricting Fees for Some Claims Management Services.
The SRA say:
'We particularly welcome views from the firms that we regulate, consumers, other regulators and those who work with law firms in progressing claims for consumers.
Through this discussion paper, we want to explore:
- whether there is anything different about the profile of case types undertaken by law firms as compared to claims management companies that may result in significantly different impacts from fee restrictions.
- how law firms, and different segments of law firms, operate which may impact on their sustainability as a result of fee restrictions and therefore the ability of consumers to access claims management services from law firms.
We will need law firms and other stakeholders to provide evidence supporting their response if they identify any detrimental or beneficial impacts or unintended consequences.
The CRA will be speaking to law firms over the coming months about this paper and the work going forward.
the financial ombudsman service
the financial ombudsman service
the financial ombudsman service
As the claims and redress landscape evolves beyond PPI, and as complex and emerging issues arise, the CRA remains deeply concerned at the activities and decisions of the Financial Ombudsman Service. (FOS)
In 2018, the then ACC worked with Channel 4 and Nine Lives Media in the production of the 'Dispatches' programme that found 'that staff with inadequate training or understanding of financial products are judging cases, with some having reached decisions in favour of the banks, without properly reading case files.'
Further to that, Channel 4's Dispatches also told us 'As well as problems with insufficient training, insiders say a major backlog of cases built up in 2014/2015 - in part due to the level of PPI claims.
'When the FOS realised it had a problem, its investigators had to take on more cases. If they missed a target, their pay and promotion could suffer.
'Insider: “11,000 cases fell into a black hole. Two years later we find out they’ve not been looked at and we had to work our way through them all. Some post was two years old.'
In January of this year, Chair of the Treasury Select Committee, the Rt Hon Mel Stride MP, wrote to Caroline Wayman again expressing concern at the level of service in the FOS, especially in the light of the growing complexity of cases (as in the areas of pensions, mortgages and investments).
Mr Stride said:
“The impact of coronavirus appears to have had a significant impact on the effectiveness of the FOS, with over 56,000 cases open for more than six months and over 23,000 open for more than two years.
“As the Committee expressed in our recent evidence session, there are concerns about the FOS’ budget. It costs the FOS on average £960 to resolve a case, against the case fee of £650, and it’s funding its expenditure through its reserves.
“The Committee will want to explore these and other issues in detail around the time that the FOS publishes its final budget in the spring. We will be inviting Ms Wayman and Baroness Manzoor, FOS Chair, to provide evidence.”
The CRA and its members are compiling a dossier of evidence for the Committee and we want your views and experiences of the failures of the FOS and it's impact on your customers.
'plevin problems'
the financial ombudsman service
the financial ombudsman service
One of the areas where there are clearly evolving issues of consumer detriment that the industry as a whole needs to be united is around the growing 'Plevin' claim landscape.
As the majority of firms involved in these claims for non-disclosure, of 'hidden commissions', creating an unfair relationship between the consumer and the lender, are now experiencing a range of issues on the behaviour and defence tactics of lenders, and the regulators appear to be unwilling to intervene.
This cannot be acceptable as consumers are not being treated fairly in these cases by lenders or regulators.
The CRA does not think this should continue to happen without a strong rebuttal and response from the industry as a whole, and we are initiating an industry campaign to fight back against the lenders and others to allow consumers to continue to have access to justice in these claims.
We are seeing issues such as:
- Defence Tactics of Delay
- Defending then Settling 'at Court Steps'
- Lenders Defending using PS17/3 Tipping Point
When the industry bodies raised the issues that are currently affecting consumers and their representatives directly with the FCA in January 2021, the FCA were dismissive of the complaints and indicated that they did not feel that they were the relevant body to have a view on these issues, or lender behaviour in these issues.
This is unacceptable.
As an Industry we now have to work closely together across all elements of the sector, to ensure that the consumer is being given the best service and is being treated fairly when seeking access to justice for a 'Plevin' claim.
We are now convening an Industry Roundtable which will discuss the issues and produce an action plan for a campaign to respond to this challenge.
We need as much evidence of the failures of the system, the behaviour of lenders, the attitude of regulators and the inefficiency of the system as a whole to strengthen our case on behalf of consumers across the UK. If you have problems such as these, or evidence that you think we should include in our work, please do get in touch today.
The CRA was formed from the evolution of the ACC
