Smith: Industry solution needed
The law firm with the biggest car finance claims book in the UK has today called for a temporary ban on all advertising for such claims.
North-West firm Courmacs Legal, which has 1.6m clients and 4m claims, said the industry had to sort out the problem of duplicate claims – where victims have signed up to more than one professional representative – before advertising could resume.
The FCA recently estimated that over a million complaints have multiple representatives. There have been instances of consumers signing up the same claim with 20 different representatives.
Consumers were at risk of being penalised by multiple termination fees if they wanted to get out of the claims, Courmacs warned.
The firm said it stopped its own marketing to potential car finance claimants a year ago for this reason.
It also called for the joint taskforce on motor finance claims – made up of the Solicitors Regulation Authority (SRA), Financial Conduct Authority (FCA), Advertising Standards Authority and the newly renamed Information Commission – to look at the FCA’s own stance on advertising on car finance compensation.
It said FCA representatives have made public statements threatening to pull its redress scheme while also still advertising to consumers that they must trust in the redress scheme and that it was going ahead.
Darren Smith, Courmacs Legal managing director – who will be discussing this at today’s Claims Futures conference – said: “The joint taskforce is absolutely right to have been cracking down on aggressive practices and poor handling of motor finance claims.
“There is clearly now a significant issue with duplicative representation and we in the industry must appreciate this and undertake to solve it together.
“While cooperation between representatives is certainly helpful, it will not lead to swift solutions – we believe that more drastic action is needed immediately if the industry can be seen as trustworthy, transparent and truly putting the consumer’s interest first.”
The only remedy right now that prevented future harm to consumers until the issue was resolved was “a blanket ban on advertising”, he went on.
“All of us need to play our role here and we call on the rest of the industry to follow suit and join us in supporting this ban.”
Further, he urged a roundtable meeting of the FCA, SRA, consumer organisations and industry representatives “to facilitate industry led solutions on this critical issue”.
An FCA spokesman said: “We are defending our scheme as the best way to compensate consumers. Whatever the outcome of the legal challenges, consumers’ complaints would still need to be dealt with.
“Our advertising doesn’t promote the scheme – it makes people aware they may be owed money and can complain directly to their lender for free.”
The FCA revealed recently that it is working with the SRA on a charter that lenders, claims management companies (CMCs) and claimant law firms would be invited to sign.
It will commit lenders and professional representatives to a process that ensures consumers can choose the representative they want without the risk of being disadvantaged by multiple exit fees.
The FCA shared the charter initially with the two largest CMCs, the five largest law firms and 17 lenders. “Most, though not all, firms have been supportive of the initiative and have engaged constructively. We will look to broaden participation and publish the names of signatories.”
In separate news, Black Horse and Close Brothers have applied to the Supreme Court for permission to appeal June’s Court of Appeal ruling 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.
The claimants’ solicitors are Barings Law in Manchester. Chairman Robert Whitehead said this move – and the challenge to the FCA’s redress scheme – showed that “lenders do not wish to compensate their customers, either through the courts or through the proposed FCA scheme, and will do all they can to delay compensation in the hope that claimants lose interest”.
Kevin Durkin, director of Manchester firm HD Law and another leading claimant solicitor in motor finance, agreed that the attempt to appeal was “a deliberate attempt to delay the process and make it harder for drivers to be able to seek the compensation they are owed”.
He added: “Black Horse customers make up 14.8% of our current claims, more than any other lender, and those consumers are already taking steps to protect their position and pursue the compensation they may be entitled to.”
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