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FSA warning over claims management firms - 17/11/2009
Consumers have been warned again over the practices of some claims management companies, following a withdrawn repossession case against a borrower who was sold payment protection insurance (PPI).
The Financial Services Authority’s director of small firms Lesley Titcomb recently highlighted issues around claims management, telling financial services professionals that the regulator expects advisers to "act with integrity."
She added: "While we recognise there are good claims managers out there, as with any sector there are poor firms and we expect you to act with integrity and to make fair treatment of your customers central to what you do."
The warning followed a case of an unfair relationship between First Plus and a borrower due to the mis-selling of a PPI policy to a customer.
First Plus sought possession of the home of Roy Barker, a customer from East Peckham in Kent, as a result of his inability to repay the monthly instalment of £1,025. Mr Barker launched a counterclaim on the basis that the lender had created the unfair relationship over his single premium PPI policy with the firm.
Arrears on the secured loan account were just over £9,000 as Mr Barker had experienced financial difficulty due to being out of work while recovering from cancer. Mr Barker borrowed £91,000 and was sold a single premium PPI policy of £22,285.90.
Barker, an NHS employee, said: "I was not told that my cancer would place restrictions on my ability to claim on my PPI policy."
Carl Wright, chief executive of claims management firm Cartel Client Review, which managed Barker’s case, said: "What made this case worse was the fact that First Plus knew that Mr Barker worked for the NHS, would have known the benefit entitlement of NHS staff, and therefore whether or not selling a £22,000 single premium PPI policy was in his best interests."
Barker argued that there was an unfair relationship because of three main points. One was that the cost of the policy was excessive, representing nearly 25 per cent of the initial cash loan. Further interest was payable over the term of 192 months but Barker only received cover for 60 months.
The defendant argued he was also disadvantaged in that the policy was more expensive than others in the open market. The third point was that First Plus failed to assess adequately or have any due regard to Barker’s personal circumstances, employment history or medical history required by insurance sales guidelines. He also claimed that First Plus failed to comply with the Pre-Action Protocol before possession proceedings.
First Plus’ legal representative Eversheds withdrew the case after the defence’s counterclaim was launched just days before the possession hearing.
FSA warning over claims management firms - 17/11/2009
Consumers have been warned again over the practices of some claims management companies, following a withdrawn repossession case against a borrower who was sold payment protection insurance (PPI).
The Financial Services Authority’s director of small firms Lesley Titcomb recently highlighted issues around claims management, telling financial services professionals that the regulator expects advisers to "act with integrity."
She added: "While we recognise there are good claims managers out there, as with any sector there are poor firms and we expect you to act with integrity and to make fair treatment of your customers central to what you do."
The warning followed a case of an unfair relationship between First Plus and a borrower due to the mis-selling of a PPI policy to a customer.
First Plus sought possession of the home of Roy Barker, a customer from East Peckham in Kent, as a result of his inability to repay the monthly instalment of £1,025. Mr Barker launched a counterclaim on the basis that the lender had created the unfair relationship over his single premium PPI policy with the firm.
Arrears on the secured loan account were just over £9,000 as Mr Barker had experienced financial difficulty due to being out of work while recovering from cancer. Mr Barker borrowed £91,000 and was sold a single premium PPI policy of £22,285.90.
Barker, an NHS employee, said: "I was not told that my cancer would place restrictions on my ability to claim on my PPI policy."
Carl Wright, chief executive of claims management firm Cartel Client Review, which managed Barker’s case, said: "What made this case worse was the fact that First Plus knew that Mr Barker worked for the NHS, would have known the benefit entitlement of NHS staff, and therefore whether or not selling a £22,000 single premium PPI policy was in his best interests."
Barker argued that there was an unfair relationship because of three main points. One was that the cost of the policy was excessive, representing nearly 25 per cent of the initial cash loan. Further interest was payable over the term of 192 months but Barker only received cover for 60 months.
The defendant argued he was also disadvantaged in that the policy was more expensive than others in the open market. The third point was that First Plus failed to assess adequately or have any due regard to Barker’s personal circumstances, employment history or medical history required by insurance sales guidelines. He also claimed that First Plus failed to comply with the Pre-Action Protocol before possession proceedings.
First Plus’ legal representative Eversheds withdrew the case after the defence’s counterclaim was launched just days before the possession hearing.
