In July 2013, Mrs F instructed a claims management company (CMC) to make a claim on her behalf for mis-sold Payment Protection Insurance (PPI) against her bank. Mrs F signed a letter of authority and the CMC’s terms and conditions.
The CMC confirmed the existence of the PPI policy and subsequently made a claim to the bank in September 2013. The bank had eight weeks to issue a response. On 5 November 2013, the bank rejected Mrs F’s claim and issued a final response. The CMC disputes receiving this letter.
The CMC chased the bank in May 2014 for a final response, which was received in July the same year. The content of the letter was noted on the CMC’s internal systems but a copy of the letter was not saved.
In light of the bank’s rejection of the claim, a form for the claim to be taken to the Financial Ombudsman Service (FOS) was then sent to Mrs F for her to complete and sign. Mrs F returned the completed document and her claim was passed to FOS at the end of July 2014.
FOS immediately contacted the CMC for a copy of the final response from the bank, which was required to investigate Mrs F’s complaint. Attempts were initially made by the CMC to obtain a copy letter but this was not received.
The bank then challenged FOS’ ability to consider the claim as they believed that the six-month deadline for bringing a claim had expired. Further enquiries by FOS showed that the deadline had passed on 5 May 2014.
On 8 May 2014, the CMC informed Mrs F that FOS would not be reviewing her claim.
Mrs F subsequently complained that the company had failed to progress her claim within a reasonable time, which resulted in her missing the FOS deadline. As a result, she was out of time from having her claim considered by FOS and felt that she had suffered a financial detriment.
The Legal Ombudsman’s enquiries determined that the CMC had failed to progress Mrs F’s claim and noted as follows:
- It was reasonable to have expected the CMC to be aware that they had not received a final response from the bank after the 8 week deadline had passed; that the company took no action at all in respect of the claim for eight months was unsatisfactory and constituted poor service.
- Once a copy of the final response had been received, that the CMC failed to note that it had been more than six months since the final response was issued was a fundamental service failing. Any action taken after this time was of no benefit to Mrs F, as her claim was out of time.
- A similar delay was identified when the CMC failed to chase the bank for a copy of the final response required by FOS when they realised that they had not saved this to their own system. The evidence showed that there was a six month delay between the CMC asking the bank for a copy and taking further action to either chase the bank or contact the customer.
- However, the Legal Ombudsman could not speculate on what would or would not have been awarded had Mrs F’s claim been considered by FOS; there was no evidence that the outcome of her claim would have been any different.
- Instead, the Legal Ombudsman compensated Mrs F for the ‘loss of opportunity’ of having her claim considered by FOS.
To resolve the complaint, the Legal Ombudsman awarded £250 in compensation.
Learning points for CMCs:
This case highlights the importance of CMCs:
- Being aware of their continuing professional obligation to exercise due diligence, which includes being aware of industry deadlines and factors that affect a customer’s claim.
- Having in place a robust procedure that ensures claims are followed up at key dates in the claims process.