Natalie Ceeney, chief executive of the Financial Ombudsman Service, says banks are to blame for an influx in claims management companies.
Speaking at the British Bankers’ Association conference today, Ceeney says it is concerned about a lack of regulation of claims firms and the problem is set to get worse if banks do not tackle the problem.
She says if a number of the firms were banks they would have been struck off a long time ago.
Ceeney says claims firms were created when banks failed to address complaints about the mis-selling of mortgage endowments.
Ceeney told delegates: “In the last decade we’ve also seen the emergence of claims-management companies. In financial services, these companies were born out of mortgage endowment mis-selling. Now, three quarters of PPI complaints to the ombudsman involve claims-management companies. They didn’t create PPI mis-selling – but they have exploited the situation aggressively – and hugely to their commercial advantage.
“The opinions I hear expressed about claims-management companies range from the unprintable to the view that they’re “a more powerful corrective force than the regulator”. But what everyone seems to agree on is that they are undeniably a powerful force in the market that can’t be ignored.
“The best way to tackle the problem is for banks to remove customer detriment and make the complaints process easier to use.”