There was even a new one this week – claims management ‘phoenixing’. If you haven’t heard of it either, it’s when a financial services firm goes out of business swiftly followed by a closely connected individual, such as a spouse or other relative, setting up a claims management firm which then charges the former customers of the collapsed firm to bring compensation claims to the FSCS. The FCA reckons there have been more than 1,300 cases of claims phoenixing, with each claim netting the unscrupulous claim manager several thousand pounds.
Phoenixing, tiny though it is, hints at the growing threat posed by financial wrongs and crime which are now forcing the authorities to take drastic action. Anyone transferring their pensions savings will face tricky new barriers proposed this week to protect them (almost £2m has been lost to pension fraud so far this year), while the FCA is losing patience with firms that don’t pay due regard to the interests of their customers and that pay only lip service to the FCA consumer principles. This week it fired a warning shot across the industry’s bows: if the level of care doesn’t improve, then it might allow private individuals to directly sue fund houses for regulatory failures.