• MPs to hear evidence of the impact of poorly designed financial services
• Millions of consumers overcharged or unfairly treated
• Consumer protection law ignored by firms seeking to maximise profits
The CEO of LegalTech disruptor, the ME Group, will tell MPs in Parliament this afternoon (27 November) that there is an epidemic of customer detriment among financially vulnerable UK consumers. Actions by financial services businesses in the structuring and design of their products unfairly penalise those that can least afford to lose out.
ME Group CEO Rob Cooper is appearing with the Financial Ombudsman Service (FOS) at the All Party Insurance and Financial Services group meeting where MPs are looking at financial services compensation.
Mr Cooper will say: “The scale of consumer detriment goes way beyond poor service and overt malpractice. There are families across Britain who face financial trouble as a direct result of poorly designed financial services, yet awareness amongst the most financially vulnerable of the unfairness and overcharging, and a decline in the inclination to complain, means they regularly fail to receive the remediation they deserve.”
He will say: “Whilst the consumer protection framework can work well for those who are aware of the detriment they have suffered and have the necessary ability and confidence to make a complaint, it all too often fails those that need the protection the most. Particularly where the problem is complex or the detriment is not overt.”
“By way of example since August 2017 over 100,000 consumers have contacted ME Group requesting help with problems relating to their mortgage. Identifying whether those consumers have a genuine complaint can be a highly involved process requiring examination of large volumes of records, and making an assessment of both the mortgage sales process and the provision of the mortgage product. Many consumers lack the necessary knowledge to make that assessment, and many can be reluctant to make a complaint for a variety of reasons from a lack of understanding of the process, to a lack of confidence, to fear of the impact upon their relationship with their mortgage provider.”
Background to the issue
Mr Cooper will explain that in the run up to the financial crash in 2008, large numbers of mortgages were sold to unsophisticated borrowers which were unsuitable and have subsequently caused considerable financial distress.
He said: “In some circumstances the sale of the mortgage was subject to advice from a mortgage advisor that failed to act in the interests of their client, whilst in other cases lenders have acted irresponsibly in their lending decisions. Whilst comparisons can be drawn to the irresponsible lending practices in the payday lending market, the impact upon consumers in the mortgage market is significantly greater”
Mr Cooper explained that it has taken a good while to understand the true extent of the detriment, and to arrange the necessary legal backing to progress cases on behalf of consumers (the general position of access to justice in the UK, particularly with the legal costs reforms, means it is not easy to facilitate litigation of this nature when the claimant cannot afford their own legal fees).
“We urge MPs on all sides of the House to look into this issue with urgency. Nobody should be forced to face an uncertain future over the security of their home as a result of failings by financial firms who were trusted to act in their interests. The links between poor quality financial services, financial wellbeing and mental health are clear, yet financially vulnerable consumers across the UK have suffered significant detriment without remediation. The full extent of this scandal is only beginning to surface, but we hope MPs will exert influence on regulators to get to the bottom of the problem and ensure those ordinary people whose lives have been blighted are properly remediated.”
The hearing is at 4.30pm in Committee Room 18 in the Palace of Westminster and is open to the media and the public
About ME Group
The ME Group is a LegalTech provider of litigation funding, insurance and legal representation for consumers facing complex legal problems.
Using our proprietary technology, we provide fast and efficient dispute resolution that is revolutionising the legal services market for the benefit of all stakeholders.
Located in Cheshire’s prestigious Alderley Park, the ME Group has rapidly grown from its inception in 2017 to become a market leader in its sector championing access to justice for consumers.