Connect with us

Popular World News

UK financial watchdog takes aim at ‘phoenix’ claims scam By Reuters

Macron says EU-Mercosur trade deal meets French demands By Euronews


UK financial watchdog takes aim at ‘phoenix’ claims scam By Reuters

© Reuters. FILE PHOTO: The Bank of England and the City of London financial district in London, Britain, November 5, 2020. REUTERS/John Sibley/File Photo

By Huw Jones LONDON (Reuters) – Britain’s financial watchdog has proposed changes to stop individuals from failed firms profiting from their own poor conduct by setting up a claims management company, a practice known as “phoenixing”. Claims management companies (CMCs) help consumers file complaints with the Financial Services Compensation Scheme (FSCS) and take a slice of any cash awarded. The Financial Conduct Authority said that in one example of phoenixing it took action against the head of a financial advice firm that had provided inadequate service to consumers. After the person was barred from acting as a company director his wife set up a CMC, which claimed more than 5 million pounds from the FSCS against her husband’s former financial advice firm. The watchdog is proposing to ban a CMC from managing FSCS claims if a person connected to the CMC is or was linked to the financial services activity that is the subject of the claim. Consumers don’t need to use a CMC to complain to the FSCS, but many do so for the convenience. The FCA said an estimated 1,319 claims over six year to the FSCS involved phoenixing, with a total of 3.7 million pounds paid out per year. The claims cost consumers on average 11,000 pounds per claim in CMC fees and other costs.
PIMFA, a trade association for the investment and financial advice industry, said the proposed ban would stop the transfer of risk onto the FSCS, and in the longer term help to lower the fees the FSCS charges on the financial industry to pay compensation on claims. In January the FCA consulted on a proposed a price cap on CMC fees.
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Source link

Continue Reading
You may also like...
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *


To Top
error: Content is protected !!