30th September 2012

Dear Mr Cameron: Claim Fabrication

Claim Fabrication Is Eroding the Moral Fabric of the Country - Examples

Today I took a call from a longstanding client, a nice lady who has always struck me as being perfectly honest. The conversation went something like this:

After some more explanation and pleasantries that was the end of the conversation.

And Another Example

A short while later today at approximately 12.30 I was phoned by an Indian lady who, endearingly, kept calling me 'Dear'.

She told me that I was due a £3000 refund because "you had a loan and you must have paid PPI".  She then asked me when I had the loan (this being the loan that she had already told me I had!) so I told her that I had a loan between 2005 and 2010 from Bank of Scotland and it was for £10,000, I did in fact have such a loan, having borrowed it to buy two cars, one for me and one for my wife. Ten grand goes a long way up here if one buys judiciously.

The dear lady then passed me to her supervisor 'Jack' who told me that I didn't need to pay "even a single penny",  that I had "paid some extra money" and that I was "going to get it back". 

Jack then told me that I had paid £12,682 of which only £300 was interest and the rest was all PPI costs.  He said that he was calling "from the PPI department in Kettering", by which I presume he meant the one in Northamptonshire, not a suburb of Mumbai.

Jack told me that my loan was "personal for home improvements" even though at this point in the conversation he had not asked me what the loan was for at all. As above, it was for the purchase of two cars. 

Jack then told me -

"You have PPI because it was a compulsory part of the loan package.". 

"You never used it.". 

"You never claimed on it."

"You've never complained to the bank". 

"You've never been in a debt management plan, had an IVA or been made bankrupt".  "The bank people mis-sold you the PPI telling you it was a compulsory part of your loan package". 

Jack's psychic powers were truly amazing. He knew all this without even asking. Just to make sure I'd got the message he told me to write down that I'd repaid a total of £12,686 and again that I had never used, claimed or complained about the PPI sale.

Jack then said "Don't tell anyone I've told you all this" before patching me through to Simon Birchnall from PPI Claimsline whose website is www.ppiclaimsline.com. 

To be fair to Simon he did not try to put words in my mouth and he accepted the answers I gave him without asking me to change them in any way.  I do strongly suspect however that his part of the scam has in effect been hived off to India so as to create a firewall between the people who are fabricating the claims on the one hand, and the firm that is processing them on the other.  I think this is what Ronald Reagan termed 'plausible deniability'. One half of the operation in India, unregulated by anyone, coaches supposed 'victims' of mis-selling to lie. These 'victims' are in reality fraudsters parroting the lines they have been given.  The coached fraudsters are then handed over to the regulated UK firm which blamelessly handles the rest of the fabrication exercise, the fraud-coaching having been taken care of in India.

The fact remains however that somebody must have trained these people in India and clearly they regard it as being in their best interests to ensure that their clients trot out a plausible story. 

So cui prodest and cui bono?

Simon told me that their fee was 25%+VAT and that the average refund they obtained was £3300.  He also stated that they were regulated by the Ministry of Justice.  I wrote this down specifically, because it is my understanding that firms are not now allowed to describe themselves as being regulated by the MoJ.  They are sending me some paperwork which I shall not, obviously, complete, as I was not mis-sold PPI.

And Another Example

I recently had my annual holiday ruined by an email from my PA informing me of a 'complaint' received from another claim fabricator Money Claims UK Ltd. In brief this is the sequence of events:

In November 2006 I personally took a call from MX, the son of EX, the client who has made the complaint.  The file note of the conversation dictated and typed at the time records that MX found us via an Internet search and was telephoning us from Australia.  In his call, he explained that his mother was 69 years of age and had recently lost a court case against her own daughter at a total cost to her of some £50,000. He explained that her house was worth £126,000 and she could afford total mortgage outgoings of £300pm.  He made it clear that his mother was looking for some form of equity release or an interest only mortgage and that she had no particular intention of repaying it, the priority being that she could stay living in the house for the rest of her life.  The enquiry was immediately passed to the our mortgage adviser who did all the work, copying her son in on everything with her permission.  It is the general policy of the firm to encourage our more elderly clients to involve their children or at least make them fully aware of work we are doing for them. That way we don't get accused of conning poor little old ladies. 

From the start it was clear that -

• The borrowing was small so any lender's commission would be minimal;
• There would be no commission from life, critical illness, Income Protection Insurance or Mortgage Payment Protection Insurance cover and probably none even from Buildings & Contents insurance either as the client would be better off using a specialist such as Saga. The client had whole-of-life cover in place for a sum assured of £50,000 and we would not recommend life cover to a person of her age with no dependents. 
• The case would clearly be difficult to place given the client's age and the income multiple required.

It was clear however that EX was in considerable distress and of limited means. We therefore decided that we would do this case for her for our standard advice fee of £295 plus whatever procuration fee (lender's commission) happened to be generated. In short, we did this as what we commonly refer to as a 'charity job'.

We checked her income and outgoings and after a lot of work got her a prime deal with Northern Rock on an interest-only mortgage costing £233pm.  Actually she had £644 of 'spare' income, not the £300pm quoted, so the deal was easily affordable. The borrowing was hard to place given her age and status but we did it, even getting a fast-track by paying the survey fee for her on my personal credit card. The loan was over 25 years, i.e. to age 94. Statistically she'll be dead by 89. Job done - she gets to live in her house for the rest of her life at an affordable cost. Even if she lives past 94 in her own home we can keep her there with a great deal on a 'proper' equity release product. (94 is a terrific age to do ER.) Everything was confirmed in writing and she was given all the research to show it was the best deal.

For all our work, which was considerable given the difficulty in placing the deal, we received a procuration fee of £325 which together with the advice fee of £295 made a total income of £620. Of this £403 was paid to the adviser as his share and £217 retained by our company. 

EX's comment to our adviser, which he still recalled vividly when I interviewed him, was“Young man, last night I slept properly for the first time in years.  I shall never forget what you have done for me and I will never be able to repay you, if you ever fall on hard time’s then knock on my door and I will help you for I can never thank you enough for what you have done for me”.

Our adviser was actually about 48 at the time but I guess that seemed young to EX.

Every year since we have written to EX offering a meeting at her home at our expense in case she had any financial concerns. We offered these meetings as part of our ongoing client care even though, in truth, we had little or no chance of ever earning any more income from this client. All offers were declined or ignored. Five years and seven months after completing the mortgage and with no intimation of dissatisfaction of any kind previously having been received, Money Claims (UK) Ltd issued a letter of complaint with a letter of authority signed by EX. Basically the letter chucks every conceivable bit of mud at the wall in the hope that one bit at least might stick.

To sum it up, we helped an old lady, did everything asked of us and more, earned not a lot in the process, and now we're spending time and money fighting a fabricated claim. If we had been hard nosed we would have either turned EX away completely or we would have charged her a minimum £500 advice fee.  We did not do that. On the contrary, we did our absolute best for this client, getting her the best deal on the market in a very shot space of time and saving her home in which she still lives comfortably to this very day.

I would have been very happy, had my late mother been in EX's position, for her to have had the advice and service we gave. If I had been in EX's position I would have been happy to have had it myself. My attitude would have been "Okay, I made a mistake suing my daughter and it's cost me £50,000. Now I'm going to make sure I can still live in my house for the rest of my life and have it sold to pay off the debt when I die. My son will get his share, my daughter has had hers already."  I am not suggesting that a 75-year old lady with arthritis should be doing cartwheels of joy down the road, but I can see no reason for her to be unhappy with what we achieved.

Where Did This Complaint Come From?

As I see it there are three possibilities:

1. EX herself of her own initiative contacted MCUKL. I hope not, as that really would destroy my faith in human nature, but it is not impossible given that she had previously indulged in speculative litigation against her daughter, albeit with disastrous results. I am forced them to wonder whether this is a repeat performance. It is strange though, as throughout the entire prior sequence of events, including all the review offers, EX gave no indication of dissatisfaction.

1. EX was inveigled into signing MCUKL's authority to pursue a speculative claim, probably with a blandishment that PII would pay it, not us.

1. This complaint originated from EX's son who has heard about the 'free money' culture that seems to have taken over the UK with claim fabricators running amuck. It would not be the first such case I have seen. A fellow IFA in Leeds did an equity release case for an elderly couple who were personal friends at their behest. He was devastated to receive a claim a few years later alleging mis-selling. On examination it turned out that their son had strong-armed them into making a complaint, fearful that his parents had blown what he had presumed would be his inheritance.

We have rejected the complaint. When making it, MCUKL threatened that if we didn't throw some cash at them it would go to the FOS so I presume it will, and we will fight it there. If we lose we might as well shut the business and every other IFA might as well do likewise, because the message will be pretty clear that we are just cash cows for crooks to milk.

I suspect EX has led a blameless life. I will bet she has never even had a parking ticket. Now though she is a willing party to a conspiracy to defraud my company. There are thousands like her, ordinary people, not technically criminals - yet - and certainly not thinking of themselves as such. But all of them are willingly submitting themselves to coaching by claim fabricators to defraud banks, IFAs and insurance companies.  All of them getting used to the idea that lying is legitimate and crime pays.

What kind of society do you want Mr Cameron? And what kind of society do you think the British people want? Once the state effectively tells the people that fraud is okay, and it gets people used to that way of thinking, it takes a lot to educate them back into honest ways. At this rate the people of the UK will end up as personally dishonest and financially corrupt as those of some third world nations I can think of.  Do you want that to happen? And if not, what do you propose to do about it?

Yours sincerely

Neil F Liversidge Dip PFS

MANAGING DIRECTOR            

Yours sincerely

Neil F Liversidge, Dip PFS

Managing Director

West Riding Personal Financial Solutions Ltd

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