Speaking in the House of Lords this afternoon, justice minister Lord McNally said large amounts of money set aside by banks to compensate for payment protection insurance misselling was encouraging “dodgy practices” by CMCs.
He said: “Something like £8bn to £9bn has been set aside and could be returned to consumers and there are, to put it no higher, some dodgy practices at work by some of these firms in trying to get their hands on this.
“People are being mislead and I think we will need to take further action. It does not take a pocket calculator to see these firms can make a lot of money which should be going into the consumer’s pocket.”
Responding to a question from Labour peer Lord Kennedy, McNally defended current regulation but agreed to meet with consumer groups to see how it can be improved. He added: “Perhaps a better home for their regulation can be found but while we have responsibility we will regulate it with due diligence.”
Speaking to Money Marketing ahead of the debate, Kennedy said: “The MoJ is supposed to be regulating these firms, but judging by their ability to rip people off by charging up to a third of someone’s payout it does not look like they are doing a very good job.”
Financial Services Compensation Scheme figures published in January show 75% of PPI claims were brought by claims management firms.