Collusion or collaboration? 

There is, for me, a very happy development reported in today's edition of FT Adviser.  In fact, it's such good news that I have been doing a little jig around my study. 

Apparently, seventy-nine would-be Claims Management Companies (CMCs) have withdrawn their applications to the FCA for authorisation, following a FSCS tip-off about the "potential harm" derived from CMC activity.  Our observation has been that the harm is anything other than 'potential' - it's there for all to see, and so it is a huge encouragement that there will be seventy-nine fewer organisations of this character out there, leveraging the redress system for all its worth.  It remains for me a complete mystery why any civilised society would wish to accommodate the kinds of toxic and opportunistic activity that now receives a kind of spurious plausibility under the umbrella of FCA regulation.  Nevertheless, this announcement is demonstrative of the kind of positive collaboration between the organs of regulation that one might wish to see rather more of, in practice.

The warm glow triggered by this piece of news is, however, somewhat offset by the receipt of a notification from High-Street Bank that they have passed on our details to a CMC, in relation to a PPI case.  This feels a bit like someone rummaging through one's bins for personal identification which could then be passed on to scammers.  The documentation supplied by this High-Street Bank as justification for such an action is underwhelming, to say the least, and doesn't actually include one single data-point which might lead one towards the rational conclusion that any regulated firm might have been selling PPI in 2018.  Let that little fact sink in:  perhaps there is someone within this High-Street Bank with a preternaturally heightened level of insight who might be able to explain how anyone might have been selling PPI as late as 2018?  I rather suspect not.  In fact, to be absolutely clear about the matter, neither ValidPath, nor any of its Members have ever sold PPI, at any point in the past.

Whilst the FCA and the FSCS have been engaged in a most welcome collaboration, what this High-Street Bank is doing with the CMC in question more closely resembles collusion.  On one level, it is (perhaps) understandable - the Banks must have been deluged with PPI compensation claims, many of which arrived just as the doors were closing.  That is a natural byproduct of a redress system which utilises a kind of BOGOF methodology.  And, perhaps, under such circumstances, and especially for those whose ethical tuning is somewhat outdated, the temptation is to simply pass the buck in any (other) direction where there may be some kind of tenuous connection.  After all, as the PPI gravy train was nearing its terminus, it was as if the regulators were prescribing a kind of potent laxative, to loosen up the congested bowels of the UK's complaining public.  You didn't need any kind of proof for anything, you just needed to raise the question, and wait for the folding stuff to start dropping through your letterbox.  After all, it was Free Money, folks!

But even so... It seems reasonable to expect the personnel working within this High-Street Bank PPI Claims Department to possess something resembling rational capacity.  The Banks must have sufficient experience of CMCs to know that they'll go after anything with a pulse, even without any accurate information to work from.  Indeed, the degree of aggression is usually in inverse proportion to the amount of real due-diligence and evidence.  All they needed to do was confirm that it had sold no PII to this client, as that would have been true.  To then manufacture, on the most implausible basis imaginable, another victim for the CMC sausage-machine betrays a lack of rigour and care which contributed to the PPI scandal in the first case.  At a rather fundamental level, precisely nothing appears to have been learned.

We have yet to receive the letter from the CMC.  I can hardly wait.

Kevin Moss, 21/05/2020