It’s dog eat dog in the world of claims firms
M.M. writes: I am a 71-year-old pensioner and I hope you can help resolve a dispute with the Financial Services Compensation Scheme. I made two compensation claims in respect of shares that had been mis-sold to me, one for £18,928 and the other for £40,874. FSCS later said it had overpaid me and wanted £9,802 back. However, I was represented by a claims company, Mis-sold Shares Limited, which charged me fees of 20 per cent plus VAT, so now has £2,940 of the overpayment. I have paid FSCS £6,852, but I am being pressed to pay the £2,940 as well. LET me go straight to the good news: FSCS has now dropped its claim and you will not have to pay a penny more.
After you contacted me, I asked staff at the compensation scheme to look into how you came to be allowed more than £50,000, as this was the claims limit at the time. They explained that you made the first claim in 2012. You later realised that a further shareholding had been wrongly sold to you, so in 2016 you made a second claim, this time through Mis-sold Shares Limited.
And they added: ‘As Mr M’s two claims were made at different times, via different firms, different customer records were created, meaning the claims were not linked, which allowed us to pay him over the compensation limit with the second payment.’ Systems have now been tightened up to minimise the risk of such overpayments.
Of course, the simple answer would have been for the claims management company Mis-sold Shares to hand back the £2,940 it was overpaid as its commission. I invited the company – based in Horsham in West Sussex – to comment, but it stayed silent.
Until last year, Mis-sold Shares was licensed by the Claims Management Regulator, an offshoot of the Ministry of Justice. In 2017, the regulator began to investigate its operations and last October the company surrendered its licence.
I know this because the regulator had a policy of announcing its investigations. However, a few months ago its work was swallowed up by the Financial Conduct Authority, whose policy is the exact opposite. It never announces its investigations, often even after they have ended. The FCA told me it had not had to look into Mis-sold Shares as the previous watchdog closed its file before the handover.
So, here are some facts the FCA should know. Mis-sold Shares advertised that it was ‘established by City professionals that have a unique insight into stockbroking firms’. And it explained that ‘the practice of mis-selling shares by a number of regulated stockbrokers to trusting investors has resulted in substantial losses for the investors but massive profits for the stockbrokers.’
Few would know this better than Ian Farrell, the sole director of Mis-sold Shares. He gained his experience largely in the 1990s, when he was a boss of Euro Currency Corporation, which attracted the attention of the Serious Fraud Office after complaints involving foreign exchange investments.
The company had applied for a licence from the then City watchdog, the Securities & Investment Board, but withdrew this and ceased trading.
Farrell was also part owner of Scandex Capital Management, a currency and share dealing firm. It went into liquidation after notching up losses of more than £1million for investors.
And Farrell was one of the founders of Anderson Churchill Limited. It clashed with the City watchdog when it operated an unlicensed scheme to invest in greyhounds. The High Court ordered a halt to the scheme and the company was wound up. According to the Official Receiver, it raked in £880,000 from 500 investors, but its greyhounds were worth just £32,000.
Why should all this matter now to the Financial Conduct Authority? Well, today Farrell is the sole director of The Refund Experts Limited, a claims company based in Harlow in Essex.
And yet another claims company, Harrison Moorcroft Limited, names Farrell on its website as one of its directors – though according to Companies House he stepped down last year. Farrell may still be involved though, as this firm is at the same Harlow address as The Refund Experts.
Both firms hold a temporary licence from the FCA, allowing them to represent consumers with compensation claims. I am sure this means the FCA will be well aware of Farrell’s background. It holds the records of the previous City watchdogs and has inherited the files of the former claims regulator, so must be confident that consumers will get a fair deal. Right?