MoJ issues warning over PPI claims firms
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The Ministry of Justice, which regulates claims management firms, is seeing an increase in complaints about PPI claims firms and says it is concerned about their business practices.
It is receiving a large number of payment protection insurance complaints from consumers and financial institutions.
The MoJ says it is disturbed to see some claims firms charging upfront fees, with a number of them unfairly refusing to or delaying refunding fees at a later date when the case is unsuccessful.
In its annual report for 2010/11 into claims management firms, the MoJ says it has conducted an audit programme of 16 businesses during the second half of the year.
As a result it has suspended a number of them and some are still under investigation.
Kevin Rousell, head of claims management regulation at the MoJ, says: “Throughout the year, we received a large number of complaints from financial institutions concerning the practices of authorised businesses dealing with claims for mis-sold PPI.
“Although limited resources make it impossible for us to investigate every complaint, we use the information we receive to identify trends, crucially where a business is systematically breaching the rules.”
He says complaints often relate to misleading advertising and the submission of invalid PPI claims where claimants did not purchase a PPI policy alongside another product or service.
Rousell says: “We continue to work with the Financial Services Authority and the Financial Ombudsman Service to identify and deal with poor practices used by some claims management businesses.
“Firms that breach consumer protection requirements will be subject to investigation and enforcement action.”
The report also reveals that it is seeing a rise in firms specialising in mis-sold mortgage and investment claims and it is continuing to monitor these areas.
The MoJ, FSA, FOS and the Financial Services Compensation Scheme has released guidance for consumers today on the role of claims firms and what they should expect when dealing with one.
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Readers' comments (8)
Bill Wells | 19 Jul 2011 12:07 pm
Why is the MoJ sat on its ass just being concerned ? Perhaps it should use its powers, get off its ass, and do something about these crooks !
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Toddy | 19 Jul 2011 1:44 pm
It will always be a problem when the regulators are basing their rules on that a consumer is never going to take any responsibility for their own actions. Why would a consumer start a complaint about PPI when they never took one out in the first place?
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Dan McGeehan | 19 Jul 2011 1:56 pm
It is all very good releasing guidance but most people will not easily access this. When you have claims mgt firms taking up positions in shopping centre's and main streets, using texting and voicemail to get clients more needs to be done. One start would be stop firms charging fees upfront and being open with clients exactly what the fee will be.
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Anonymous | 19 Jul 2011 3:37 pm
I have had a claims management firm on the phone to me today looking for referrals. Initially they said they take 30% of the compensation. When pressed they said 30% plus VAT so a £1000 compensation award to the customer would net them £640. 36% to the claims management company for doing not a great deal. Not a great deal for the client in my book.
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Liz | 19 Jul 2011 5:05 pm
Toddy, I get numerous complaints from CMCs when the client never took out a PPI policy in the first place - they may have a quote, but declined it, or cancelled it from outset, for example, but because something in their clients paperwork indicates a PPI policy was discussed they complain just to see what might stick. We sell PPI responsibily, and I have never had one casea upheld by FOS, yet every week we have to pay another £500 to FOS for 'investigating' these spurious claims by ambulance chasers. Not to mention the time I have to spend defending our sales force. They are nothing but parasites.
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Anonymous | 19 Jul 2011 6:05 pm
If it wasn't for the banks ripping customers off with high premiums for insurance that clients dont even know they have or cant make a claim there would be no need for cmc's in the first place!
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Michael Nicholls | 20 Jul 2011 10:24 am
This situation tends to happen when the MOJ give a licence to anyone who applies and then wonders why they're ripping people off! If there had been a thorough vetting process a lot of these companies wouldn't get a licence in the first place. It was a nice money spinner for the Govt while it lasted though
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Mic2002 | 20 Jul 2011 4:59 pm
Having the moj the oft and the Fsa all doing different things at different times is a joke. No wonder some firms get away with this.
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