New caps on financial claim fees

Topics: Civil justice,Costs, fees and funding,Personal injury & clinical negligence,Government & politics

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  • Lord Faulks

Fees for winning financial claims cases such as mis-sold payment protection insurance are to be capped, under proposals to protect consumers from high charges by some claims management companies (CMCs).

The Ministry of Justice plans to cap the maximum completion fee at 15% on ‘bulk claims’ with a single lender, and cap the overall charge for claims worth more than £2,000 at £300.


The government said the changes will stop companies charging ‘exaggerated prices’, which it said can amount to as much as 40% of total financial compensation.

According to the government, CMCs have taken an estimated £3.5bn in charges since 2011. It said that there is ‘widespread concern’ from consumer groups, banks and insurers that CMCs continue to make speculative claims through aggressive marketing and nuisance calls.

The proposals also include introducing a maximum ‘cancellation’ fee of £300 for bulk claims, as well as bans on referral fees for PPI or packaged bank accounts claims, upfront fees, and fees where no relationship is found between the consumer and a lender.

The MoJ has also proposed capping the maximum fee to 25% of total compensation in any other financial cases.

Justice minister Lord Faulks (pictured) said: ‘Some claims management companies charge as much as 40% of the final compensation awarded for very little work. This has got to stop, and this government is taking action to make sure people aren’t being taken advantage of by these greedy practices.’

The proposals build on plans first announced by the chancellor George Osborne in the 2015 summer budget. An eight-week consultation starts today. 

Readers' comments (16)

  • About time. I just completed a PPI claim for a friend of mine. He filled in the forms and I submitted it for him = £26k repayment. It maybe took an hour of my time if that and naturally there was no charge.

    Another friend also had a PPI claim and received about £8k for which 25% was deducted - £2k for almost no work. I would have done it free and I continue to give him grief about it!

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  • Agree with comment, BUT people are lazy, they want to be spoon fed, Martin Lewis has had free letter templates on his site for years, you can lead a horse to water.......
    PS; Can we put caps on politicians expenses please and at the MOJ ?

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  • There would be no need for CMCs to be involved in this area of business if the banks voluntarily offered refunds to those customers they wrongly sold PPI to in the first place. I have not seen any evidence the banks have trawled through the loans they have made where they also sold PPI and contacted their customers to see if it was appropriate and if not refunded the premiums. I am not championing CMCs but I fail to see what it has to do with the government-is this not free enterprise.

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  • or is this the start of something more-to acknowledge they cannot stop CMCs moving into the small claims track PI work if the SCT limit is increased to £5k but to restrict the amount they (or anybody else) will be able to charge for assisting a claimant claim fair compensation?

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  • Stupid me! I read only the first line of the title to this report. Thus I thought that this Government had taken the next quantum leap and put a cap on the amount that can be recovered by way of a claim for financial loss. Then I read the whole of the title and the report. But still I concluded by thinking what a good idea mistakenly I'd had at the outset. And why not start the ball rolling by applying it to PPI claims? Why should these greedy claimants be able to recover the totality of the monies which they paid to the banks whilst the wool was pulled over their eyes? But maybe I'm not the only one to think along these lines? Maybe this Government has given the nod to HSBC in this respect? There has to be a real reason why it's decided to keep its HQ inLondon!

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  • Problems remain most CMCs remain in breach of s.19 FSMA yet the brains at the MoJ and SRA are only just waking up to the fact CMCs are to be sued by ripped off consumers as unregulated FCA conducting Firms?

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  • In a "free" market why are legal fees singled out for Communist style government control?

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  • Compare the hands on approach by big government re: solicitors /CMCs pay.

    And the hands off approach to the high street banks, the big three telecoms companies and the big six energy companies.

    We have virtual cartels in all these sectors.

    This country makes me sick.

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  • Why should CMC's fees be regulated? There seems to be a functioning market in the CMC field, with lots of need whatsoever for any regulation of fees.

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  • I've noted a few of these comments - I believe that I had PPI on a NatWest account but having written to the bank for details of my accounts, they wrote back to me to say that they weren't obliged to release that information to me so I can't even complete the claim form as I don't know which accounts, if any, were affected and I don't have account numbers either!
    That may be why these claims companies are still going as a lot of folks like us just give up!!

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