April 4, 2014

Claims Management Companies Earned £5 Billion from PPI Claims

Category: Finance — Tags: , , , , – admin @ 6:17 am

Consumer rights charity group Citizens Advice said that claims management companies or CMCs earned a total of £5 billion in 2013 persuading consumers to allow them to make a PPI claim on their behalf. According to the group’s research, more than 28% of people who used a PPI CMC did not know how to make a PPI claim or they did not know what PPI was in the first place.

Citizens Advice blamed the failure of banks to call on consumers who may possibly be mis sold PPI. According to ex-Chief Ombudsman Natalie Ceeney, banks have “dragged their feet”, allowing CMCs to take the position on calling upon consumers possibly mis sold a payment protection insurance policy.

The Financial Ombudsman said that consumers could make a PPI claim without the help of claims management companies, yet some consumers thought that CMCs were representatives from the Ministry of Justice tasked to find consumers mis sold the financial product.

Many consumers also found more trouble working with rogue PPI claims management companies. Some consumers complained their CMCs charged up-front fees despite signing a contingency fee (no win no fee) contract. Consumers also mentioned some CMCs did not clarify the fee structure of their services.

The Ministry of Justice had recently depopulated CMCs by revoking the license numbers of 200 rouge claims accused of cold calls, illicit text messages and unsatisfactory services.