Much has been written in the last two days about the claims management company, Rebus, going into Administration.
Rebus has chased IFA’s and accountants over the alleged mis-selling of investments, often to high profile entertainment and sports stars often using the complaints procedures set up by the Financial Ombudsman Service.
The objective seemed to be to extract large payments from the Professional Indemnity Insurance Policies held by the firms affected. The Rebus model usually involved charging low up front fees charged to individuals, circa £1,500, and taking 20% of any award made as a result of a successful claim. Not surprisingly, many individuals took up the Rebus offer which involved little effort but promised rich pickings for them also if the claims were successful.
But the Rebus model was always flawed as it needed to be funded and the low up front fees were never sufficient to do that. It is not difficult to imagine the insurers coming under attack and their legal advisers and the IFA’s were always going to robustly challenge Rebus’s claims. This together with the time taken by FOS (or the courts) to resolve them meant an inevitable strain on the company’s cash flow.
In 2015, Rebus is reported to have raised £817,000 through the crowdfunding website, Crowdcube. Investors were told that indicative returns could be as much 10 times their original investment within three years. That money would now appear to have been lost and the question arises as to whom the investors might turn if they now have a complaint? And whilst the biggest loss in UK crowd funding is rightly making the headlines a detailed examination of the reasons for it needs to take place.
It’s clear that some vultures are already circling to “help” the unfortunate claimants on Rebus’s books. However, the big question remains as to what extent the level Rebus’s claims book could ever be recovered. It is public knowledge that Rebus has seen many of its claims rejected by FOS or withdrawn in recent months. It’s doubtful that the FSCS will step in to pay compensation where FOS has rejected claims for sound reasons so the last resort for claimants would be through the courts. This would involve claimants incurring considerable expense even if such action could be taken.
Seemingly many of the complaints will already be well outside the statutory time limits allowed for such action.
The integrity of claims companies like Rebus can only be called into question particularly when they employ individuals who have been sanctioned by the regulatory authorities or where they were previously engaged in the sale of the very products they now say are worthy of pursuit.
Perhaps the best advice claimants can get sits outside the ambulance chasing firms who are always potentially part of the crash they are attending?