Durkin: It’s a complete mess
An influential law firm’s call for a temporary ban on advertising motor finance claims so as to solve the problem of duplicate cases has found support from other leading solicitors in the field.
Darren Smith, managing director of Courmacs Legal, which has 1.6m clients and 4m claims, floated the idea at last week’s Claims Futures conference and said the first law firm or claims management company to sign up a client in a compliant manner should be the one that retains them.
“[The ban] will also make it much easier for the regulators to actually take action against the bad actors who continually put out adverts that cause problems for all of us,” he said. “We think it would be a sensible consumer protection measure.”
The Financial Conduct Authority (FCA) recently estimated that over a million complaints have multiple representatives.
Speakers at the conference session on motor finance explained that the situation was caused by the long delay in the FCA putting its redress scheme in place, and clients being attracted by advertising that misleadingly suggested they could get their compensation sooner.
Kavon Hussain, director of Manchester firm Consumer Rights Solicitors, added that delays by lenders in responding with details of commissions paid by clients was another reason advertising by others wrongly promising a quick outcome could appeal to them.
He said a ban “probably is” the right way forward, given the amount of “remarketing to the same clients over and over again”.
Kevin Durkin, the solicitor who brought the successful Supreme Court claim on motor finance commissions, said he too agreed “in principle” with a ban, although questioned whether it could happen in practice.
Mr Durkin, director at HD Law, said “it’s just a complete mess” and that the Solicitors Regulation Authority “seems to be saying this is your problem and you need to sort it out. It really isn’t the creation of anything we’ve done.
“The problem has been created by complete and utter delay and consumers being out of pocket for such a period of time. It builds up frustration and tetchiness understandably and clients should not, but they do, sign up with multiple law firms because it’s ‘no win, no fee’.
“There’s no harm in doing so in their eyes and it’s created this entire mess. As Darren says, we’re being penalised for doing our job properly, signing up clients legitimately, giving them all the necessary information, because our client hasn’t received their money and they’ve seen an [advert] from another firm.”
Mr Smith said that, when a client was signed up with multiple firms, it should be the first that “signed them up properly first” whose retainer should be valid.
“If someone can show they’ve got a compliant onboarding process for that client, my argument would be there shouldn’t be a second and third firm because the second, third firms doing their checks properly should have realised.”
Panel discussion (l-r): Kavon Hussain, Kevin Durkin, Alex Neill, Darren Smith
Mr Durkin and Mr Hussain predicted that the Supreme Court would refuse the hear an appeal against June’s Court of Appeal ruling [1] that more than 5,000 people with motor finance claims could use “multi-claimant” or omnibus claim forms and did not have to file them separately.
At that point, they said, it was likely that more such claims would be brought, given the delay in the FCA scheme.
Mr Durkin suggested that clients may not want to wait for a scheme that might not happen at all, or if it did might not offer enough redress. “I think most reasonably minded clients would say, after two or three years of delay, ‘Please, can we get on with this?’ I would fully understand that decision.”
Further, litigation was “the most tried and tested way” to deal with these cases.
Mr Hussain said the amounts of money it was currently recovering for clients in the courts compared favourably with the FCA scheme – plus there were many types of claim that would fall outside of it anyway.
“I think, if an FCA scheme does come in, there’s probably room for both because some clients will want some money now and not go through any process.”
He said he would likely “pivot” towards omnibus claims once the uncertainty about them was over.
Earlier in the discussion, Alex Neill, director of consumer rights group Consumer Voice – which is challenging the methodology the FCA used to calculate the compensation in the scheme – said she supported the principle of a mass redress scheme, but she was concerned that, given that this was the first time there had been one on this scale, a precedent could be set.
“If we accept low compensation for consumers, what will happen next time?”
Ms Neill said the FCA was “surprised that someone from the consumer side is challenging them”, but from what she had seen of the evidence, “our concerns are backed up by the calculations”.
Mr Smith – who is acting for Consumer Voice in the case, which will be heard by the Upper Tribunal next February [2] along with challenges by three lenders – said the FCA scheme had “massive flaws” and at the latest case management conference, counsel for the lenders admitted that they could have coped with paying a much larger amount of compensation.
He said lenders were hoping that some law firms would “go under” as a result of the delays, but he believed that claimant solicitors would end up “on the right side of this”.