The FCA has issued its first fine against a claims management company since it took over regulation of the sector eight months ago. It’s a finding which should signal the need for financial institutions to maintain the highest standards of transparency when communicating to customers.
Essex-based Professional Personal Claims (PPC) was fined £70,000 by the regulator for misleading branding and for submitting inaccurate or misleading claims to banks.
The FCA also believed that the firm was attempting to give customers the impression that they were making claims direct to those banks, when this of course, was not the case. PPC operated websites with the logos of five banks which contained their domains. The FCA said that this muddied the water of what customers might expect.
Customers could easily have been confused that the claims were being submitted directly to the banks rather than through a claims management firm in return for a fee.
“PPC’s misleading website and marketing material suggested PPC was associated with the five banks when this was not the case,” said Mark Steward, Executive Director of Enforcement. “Claims management firms must ensure their advertising is accurate. Not only in terms of what they say about themselves and their services but also in terms of what is represented.”
A lack of detail
The second charge is arguably just as damaging. People use claims management firms because they either don’t want the hassle of making the claim themselves or they aren’t confident they will fill out the forms correctly.
However, according to the FCA, PPC submitted claim forms to the banks which were either misleading or contained the wrong information.
The claims had already been made by the former regulator before the FCA took over, which had received 14 complaints about the company. PPC had originally challenged the finding in court, before withdrawing their claim in September leaving the FCA to adjudicate the penalty.
What can we learn?
This fine comes at a difficult time for claims management firms. The end of the PPI deadline leaves many people wondering what the future will bring for them. The FCA has only around 350 firms registering with them, compared to 700 during the height of the claims process.
The reputation of the sector is also extremely shaky. It has been blamed for misleading customers and also creating a compensation culture which has cost the banks billions.
If claims management firms are to go forward, the FCA, has served notice that it expects it to adhere to the highest standards of accountability and transparency. Advertising must be scrupulously accurate, communication must be clear and they will need to ensure all documentation is accurate, complete and correct. That might be something of an adjustment to a sector which has often thrived on ambiguity.
Before the deadline, the FCA had launched a high-profile marketing campaign to inform people about their rights and ensure they understood that they could make the claim themselves without using a claims firm.
Going forward they will have to ensure they are whiter than white, being clear about what they offer, how much they charge and that they are not affiliated with any bank or financial institution.