The three bodies have written to Justice Secretary Ken Clarke complaining there is “significant evidence” of rule breaking by CMCs and called for urgent action to improve the department’s regulation of them.
CMCs have been criticised for charging up to a third of compensation payouts when consumers can submit their own claims to the Financial Ombudsman Service for nothing.
In October 2010, the BBA launched a judicial review challenging the FSA’s payment protection insurance redress measures, but the High Court found in favour of the regulator.
Claims Standards Council policy director Andrew Wigmore says the consumer groups should be “ashamed of themselves” for “siding with the banks” accusing them of trying to deny consumers choice in how they make their claims.
He says that the MoJ is “extremely aggressive” in trying to stop abusive practices by CMCs that do break the rules.
He says: “For organisations that pride themselves on consumer protection and who have campaigned for consumer rights to side with the banks on this issue is utterly disgraceful, their current action to protect the banks against the consumer right to make a claim shows breathtaking ignorance and a total disregard for the consumer they profess to protect.
“The consumer is not stupid and they are fully aware that you can make a claim for free but they choose to use a third party, someone to fight on their behalf – that is the consumers choice. Are Which? and Lewis wanting to deny consumer choice as well? It seems so.”