A leading claims management company (CMC) fined £533,000 for multiple rule breaches – including its sales agents calling banks pretending to be customers – has lost an appeal against the sanction.
One recorded call heard by the tribunal involved a Help Your Claim (HYC) agent telling his grandmother that the company’s usual working practices had been altered by management while the Claims Management Regulator (CMR) was undertaking an audit.
After a four-day hearing, the First-tier Tribunal said: “We are satisfied that the admitted impersonation of customers and the comments made in the ‘Grandma call’ are indicative both of dishonesty and a lack of integrity at HYC.”
The CMR investigated HYC – a Manchester-based CMC specialising in payment protection insurance claims – in 2015 after receiving dozens of complaints. It found breaches such as misleading customers and pressure selling.
It concluded that, although the company had taken some action to remedy some of the breaches, it had allowed misconduct to continue for several months and allowed other breaches to continue.
The CMR initially proposed a financial penalty of £690,000, which it eventually reduced to £553,000, just shy of its record fine of £570,000. This equated to 4% of HYC’s turnover for the relevant period.
HYC’s most recent accounts, for the year to 30 April 2017, show it made a £1.5m profit after tax on a £16.8m turnover. It employs around 440 staff.
Giving the ruling in the general regulatory chambers, its president, Judge Alison McKenna, said: “Faced with an accusation of continuing failure, we would have expected HYC’s appearance before the tribunal to have been based around a positive and evidenced case as to the measures that it had taken to satisfy the CMR’s concerns.
“Instead, the weight of evidence showed that HYC’s owners and staff have a flawed understanding of its regulatory obligations and have taken inadequate and/or poorly-executed remedial action, despite repeated input from the CMR…
“We gained the impression of an insular culture at HYC, in which the three shareholders were so ‘hands-on’ that they had tried to do everything themselves and did not buy in external expertise about regulatory matters.
“They accepted that they did not have the requisite knowledge themselves and we reject the submission that they appeared ‘well-versed’. We were concerned that they may regard well-informed staff as a business threat, preferring those such as [a named employee], who are so poorly-equipped for their role that they do not challenge the status quo.”
Judge McKenna said this absence of “competent persons with appropriate knowledge at the helm of HYC” meant the tribunal was not persuaded by the argument that “rogue agents” could be blamed for the failures.
Separately, the tribunal has rejected an appeal by Joseph Copeswinnerton against the CMR’s decision to cancel his authorisation because of non-payment of the annual fee by the required date.
The tribunal said the CMR made repeated attempts to contact Mr Copeswinnerton to discuss payment over a period of seven months before it cancelled his authorisation.
He claimed that he had called the CMR to inform it of difficult circumstances which meant he could not afford the £750 at the time but was waiting for money to come in from third parties. However, on the balance of probabilities, the tribunal was not satisfied that he made these phone calls, which were not recorded.