Lawrence adds that when it comes to ongoing services, there are four things that firms need to consider:
- Does the client need an ongoing service? Do the client’s needs and objectives support them getting an ongoing service?
- If the client needs an ongoing service, are their needs met by the kind of service that they are getting? “It could be right that they need a service, but perhaps they don’t need an ‘all-singing, all-dancing’ service, particularly where the fee for that is significant,” says Lawrence.
- Do clients get what the firm said they were going to get? What is it the firm is committing to do for its service, and is it delivering that routinely to clients?
- If they have received the service, is the outcome any good? “The whole point of a client paying for an ongoing service is for it to add value in enabling their needs and objectives to be met through the solution that they’re given,” Lawrence adds.
Responding to complaints
At Jencap Partners, Jenkins says the consultancy has seen a 20 per cent increase in the last quarter in firms contacting the consultancy to advise on how to deal with claims around service delivery and value.
But according to Jenkins, CMCs often bring claims that are “without merit”, although even a claim that is regarded to be baseless or speculative must be taken seriously.
However, Lawrence says that a firm would be “within its rights” to notify the FCA, which also regulates CMCs, about any “vexatious complainants”.
For firms that have provided an agreed service, Smith at B-Compliant says there remains the task of acknowledging, investigating and responding to any complaints.
“As with any complaint, either via a CMC or direct from the consumer, the appropriate Disp process should be followed,” he says. “Ensure professional indemnity insurers are notified at the earliest possible stage, and be aware of any exclusions and excesses that apply.
“The key to rebuffing a challenge from a CMC is to ensure you set out to deliver on the promises made to clients and you have supporting evidence. Remember, the burden of proof used when investigating complaints is not the same as the ‘beyond reasonable doubt’ principle applied in criminal courts.
“Neither side has to prove whether a particular event occurred. If there is conflicting evidence, a decision must be made on a ‘balance of probabilities’, ie what you believe is most likely to have happened.”
While CMCs do not have extra powers compared to if a client brought a complaint directly to a firm him or herself, Facer at Threesixty warns that CMCs have more knowledge of the complaints process, and that they “know how to niggle”.
“From the adviser’s perspective, they should check that the CMC has got a letter of authority from the client to act on their behalf,” he adds.
Vulnerable targets for CMCs
CMCs are more likely to pursue larger market players due to public noise, Facer says, while it may be more difficult for a CMC to find clients of smaller IFAs.
“From a small IFA’s perspective, it’s probably unlikely that [a CMC would] come after them as individuals. But I’d still say for all firms, they should focus on whether they are clear on what they say the proposition is, alongside their charging structure, and whether they are doing what they say they’re supposed to be doing.”
Another area that Facer flags is a situation in which firms acquire other businesses. “If you’re buying a business and you take on their clients, have you got a full understanding of the expectations of what those clients should be getting?
