James Darbyshire, a general counsel at the Financial Services Compensation Scheme (FSCS), has said he is looking forward to the Financial Conduct Authority (FCA) taking over regulation of the claims management sector which he said will drive up standards.
Speaking yesterday at the Association of Member-Directed Pension Schemes (Amps) conference, Darbyshire said he would encourage consumers not to use claims firms when making a claim to the FSCS as if they claim directly they 'stand to recover more of their losses' because their service is free.
However he acknowledged there will 'always be a place for claims firms' as some people do not want to do the claim themselves.
Darbyshire added he is looking forward to the FCA taking over regulation of claims management firms next Spring which he said would lead to positive changes.
'From my point of view the good news is that claims firms are going to come under the gambit of the FCA next year. I think that will be very good for standards in that industry and we will see some changes. It is too early to say what those changes will be but I think that will be a good thing.’
When asked if there should be a cap on claims firms' charges, Darbyshire said this would be difficult to implement as consumers sign contracts with these firms but said he expects the market to improve when the FCA takes over regulation from the Ministry of Justice (MoJ).
'Next pit of claims'
Earlier in the day, Paul Gair, a partner at law firm TLT, said when Payment Protection Insurance (PPI) claims stop after the FCA’s deadline of August 2019, PPI claims firms will move to focus on Sipp claims for their next ‘pit of claims’.
‘Once the claims firms start to see an interest developing around a particular area, for example PPI, they will then begin to focus their own energy to try and farm claims,’ Gair said.
‘There are a finite a number of claimants in any pot and these claims management firms are aware there is a shelf life to PPI claimants and are always looking for the next big set of claims. It is apparent from the number of adverts that you [Sipps] are the target for the next set.’
Gair suggested these claims firms will focus on advisers who have provided Sipp advice and the Sipp providers themselves who have accepted the investments.