The news last week that some 5,600 payment protection insurance mis-selling complaints to the Financial Ombudsman Service were bogus as no policy was sold was official confirmation of a perverse situation that brokers have grappled with for the better part of a year.
In this time, Mortgage Strategy has published numerous letters from brokers who have had to deal with these phony complaints, some of which have even resulted in them having to pay a £500 fee to FOS to deal with it.
As we have said repeatedly, advisers have been facing a death by a thousand cuts from this growing problem. But as our Star Letter shows this week, these claims have in some cases taken on a surreal, disorientating and menacing quality.
The letter writer had the strange situation of receiving a claim for a PPI deal sold to his mother-in-law when he did her mortgage. He claims there was no letter of authority from the client and, even worse, he had not sold her PPI in the first place.
“But the firm thinks it has hit on a winner and I suppose when I send a copy of the file and there is no PPI it will think I am withholding information,” he says. “My question now is – how do you prove someone didn’t take out PPI?”
It’s certainly a dilemma – how do you prove you haven’t done something when an absence of documentation is deemed as evidence that you have done something?
On the plus side, it’s good to see FOS is aware that this is a growing problem which wastes both its time and that of brokers.
But more needs to be done and it’s time for the Ministry of Justice to take a hard line against any claims firm it finds sending nonsense claims to FOS.