The increasing volume of complaints being generated by Complaint Management Companies (CMCs) is a "matter of considerable concern" for the Association of Independent Financial Advisers (Aifa).
The statement comes shortly after Clive Briault, managing director of retail markets at the Financial Services Authority (FSA), said as many as 40% of all endowment complaints are now going through CMCs.
Responding to the Financial Ombusdman Service's (Fos) Corporate Plan and Budget 2006/07, Chris Cummings, director general of Aifa, warns that evidence suggests many complaints are being passed to the Fos by CMCs without any proper investigation or due consideration being given to the final decision letters drafted by the IFA firms involved.
He adds: “It is essential that this activity is curbed to prevent the Fos forecasts being grossly underestimated and costs, which have to be met by the industry, escalating further. This is a matter of considerable concern to Aifa members and we are actively supporting the introduction of regulation for CMCs.”
Meanwhile, the FSA has published a factsheet on its website to help general insurance firms and intermediaries develop and embed good practice in relation to claims handling after a review of 34 general insurance firms with retail customers identified some areas for firms to consider.
Key findings and good practice recommendations in the factsheet include:
- Liaison with customers: firms should keep the retail customer reasonably informed about the progress of the claim and explain why a claim is being rejected or accepted only in part and offer to provide the explanation in writing;
- Complaints: all staff should be encouraged to consider complaints positively and it is optimal for complaints to be dealt with by a dedicated complaints handling team; and
- Outsourcing: insurers cannot contract out of their regulatory obligations and should take reasonable care to supervise their outsourced providers.
Alison Hewitt, head of department in the retail firms division at the FSA, says: “We are encouraged by the review findings and it seems firms have been able to implement without undue difficulty the claims handling requirements in our new rules. We have seen a lot of positive signs that firms are starting to implement Treating Customers Fairly initiatives into their processes and procedures and we would encourage the industry to continue to make efforts to improve best practice particularly in the areas we have identified.”
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Emily Perryman on 020 7968 4554 or email [email protected].IFAonline
Speaking at PA360 North
Speaking at PA360 North
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