Phoenixing – the shocking rise in mis-selling firms rising from the ashes

At present, over 400 advisers are being investigated by the FCA for ‘phoenixing’. It’s a shocking phenomenon that often involves people mis-selling a product or service and then being involved in the ‘fixing’ of the issue they created through another company. It’s becoming increasingly common in timeshare, solar panel and investments industries, where sharing of confidential customer data and cold calling is also rife.

What is phoenixing?

A phoenix company is a firm that has declared itself as insolvent, then re-established itself as an entirely new business. Operations move to the newly formed company but any debts and legal issues are left behind. Technically the new company is separate from the old, even if the people and processes are the same.

Current examples are 412 phoenixing cases being investigated by the Financial Services Compensation Scheme, where advisers who worked at IFA firms that defaulted had joined a claims management company to bring claims against their previous firms! We feel paying someone to provide help who is connected with the firm that caused your loss initially is wrong on every level, particularly where the firm had a responsibility before winding up to help its customers to obtain compensation.

Unfortunately, phoenixing is a completely legal practice but the FCA has announced proposals to ban claims management companies from managing Financial Services Compensation Scheme claims where they have a relevant connection to the claim, but this is not yet law.

Have you been cold called?

If you have received a cold call about your investment or pension, then please consider where the caller got your personal details. The technique of contacting someone unexpectedly about their finances is often one of the main hallmarks of a scam, as it is illegal. The government introduced a cold calling ban in 2019 for UK-based pension and investment companies to try and prevent them from mis-selling or pressuring people into making investments decisions on the back of an unsolicited call. Your personal details should not be available to third parties without your express permission and the caller may have got your information via a phoenix company. Do you want to be dealing with a company that trades in your data? Can the caller be trusted?

If you are concerned that you may have made a risky purchase or financial decision following a cold call, put yourself back in control and contact Lincoln Green Solicitors to help you. We are regulated by the Solicitors Regulation Authority which means we will keep you safe, keep your information confidential and put your best interests first.

How we can help

At Lincoln Green Solicitors we advise clients on a range of mis-selling issues. If you think you have been mis-sold a product or service please get in touch. We have experts in timeshares, solar panels, SIPPS and investments who can investigate your claims even if there is phoenixing involved. We may be able to recover any money lost and see if you are entitled to compensation.