Consumers ‘in the dark’ on CMC practices
A quarter of consumers are not aware that claims management companies (CMCs) take a cut of their mis-sold payment protection insurance (PPI) claim, a survey has revealed.
The joint survey by consumer watchdog Which? and MoneySavingExpert.com found that claimants were unaware of their rights and the best way to reclaim mis-sold PPI. Of more than 2,000 people surveyed, two-thirds had received phone calls from CMCs about PPI, while more than half had been sent text messages or letters.
More than half of the respondents who had used a CMC to get back mis-sold PPI would be unlikely to use one again. More than a third of people were unhappy at the value for money, with 25% aware that CMCs usually take a cut of 25% plus VAT.
Martin Lewis, from MoneySavingExpert.com, called on the Ministry of Justice, which regulates claims management companies, to increase scrutiny of their activities.
He said: ‘Sadly PPI has become a cash bonanza for unscrupulous claims companies, who through a series of lies and misdirection are persuading people they are the only option for getting their PPI money back. Even I’ve been texted to be told I’m owed £3,000 PPI - though I’ve never had the product.
‘If things do go wrong with claims companies, it’s a nightmare to get any redress. This is a billion-pound plus industry - it’s too big to be left alone.’
The findings of the survey come on the eve of a summit of major banks, credit card providers, regulators and the Financial Ombudsman service. A separate meeting with representatives of claims management companies will follow. Earlier this month, the Gazette reported banking industry allegations that CMCs were slowing down the process of legitimate PPI claims by sending speculative letters to every bank.
The Claims Standards Council condemned the practice but denied it was widespread and said any rogue members would face disciplinary action.
Comments
CMCs - A waste of space.
Just backs up what many people have been saying for some time now.
A waste of space and in this respect I agree with the Law Society on this. The practices of CMCs have deflected criticism of the banks which caused the mis-selling scandal in the first place. CMCs - like leeches have shamefully exploited consumers and submitted spurious and fraudalent claims.
Time to 'cancel' all the CMC speculative invoicers.
Hi there Kelly. What's a
Hi there Kelly.
What's a "fraudulent claim" for PPI?
The Law Society, the SRA, the
The Law Society, the SRA, the government, the OFT, the LSB (or whatever it was called) all wanted CMCs becuase they are the inevitable result of referral fees.
And of course referral fees are good because they promote competition, don't they? The legal profession was just ripping people off and runnning a racket, wasn't it? The consumer therefore wins, don't they? No? Well, too late-thats what they've got and are stuck with.
Just like the Financial Services Act in 1986 when every insurance salesman became "a financial adviser" and therefore professional and overnight just wouldn't dream of selling the "product" that gave them the greatest amount of money, would they?
Says Money Saving Expert,
Says Money Saving Expert, which is - essentially - an online CMC, and a profit making enterprise for Mr Lewis (nothing wrong with that, but words Pot and Kettle come to mind).
Oh, and what is it that Which Legal Services do? It gives standard consumer advice for a monthly fee, doesn't it? But again, there's surely a difference between them charging for giving advice (I especially like their crummy template letters which I have come accross in consumer cases, which tell my clients that they have breached "The Sale of Goods Act and / or the Supply of Goods and Services Act and / or Common Law in Scotland") and a CMC doing it.
If the banks had said (or would say) we will refund each and every PPI policy without question, then fine, nobody (not CMCs or anybody else) has a role. But they haven't. So if one person who would not have claimed receives 70% of their £2,000 payout, I'm happy with that rather than the person getting 0% and the bank keeping 100%.
I know CMCs have few freinds amongst solicitors, but this is the thin end of a wedge.
I already recieved a Law Society email telling me that I was required to work for my opponent in a litigation case if they were a litigant in person, and saying I should "consider whether the client would pay or not" (the clear implication being that I should work for free, to save the Government legal aid).
Next I'll be told that "small claims are being hampered by unnecessary solicitors". (The groundwork for this is being laid).
Next it will be wills - "rip off solicitors charging for wills which you can draft yourself using an online template".
Next conveyancing - "solicitors trying to charge for conveyancing when your bank will do it for free".
That's why I support the CMC side of the case here on principal (even though they are mostly dodgy as hell, and there probably are abuses).
Fraud
Domcoop
I take it you are not referring to the typo in the word.
Therefore it might be one where the CMC claims compensation from a firm in the knowledge a policy does not exist or was not sold by that business. Or perhaps one where the complaint is based on generic allegations which are clearly made up by the CMC - or specific allegations about the circumstances of the transaction which are deliberate lies.
In summary it is dishonest behaviour in order to get something one is not entitled to.
Perhaps the kind of behaviour similar to someone who claims on his household insurance for a carpet when he has wooden floors.
If you have knowledge of any
If you have knowledge of any cases where a CMC (or anybody) else has attempted to claim for mis-sold PPI, knowing that such a PPI policy does not exist, you should report the matter to the local police. That is clearly fraud, which is a serious criminal offence, for which the penalties are an inevitable jail term.
Of course I would wonder why anybody would put a claim in for something when they know it does not exist, as clearly to do so would cost money and involve time and expense, when the financial institution involved would of course not pay out.
On the other hand, if you mean a situation where a customer says that they think they had PPI on a policy, and the bank denies this, and the claim is nonetheless pursued, that is not fraudulent - as you well know. There is a common thread that runs through all of your comments on here. You do not seem to have grasped that a significant part of the common law tradition as practised in England and Wales is that it has an adversarial method of resolving disputes.
Nobody is right. Nobody is wrong. Everybody gets on with their business. Then a dispute comes before a court. Still nobody is right and nobody is wrong. But the defendant is presumed innocent (or in a civil context not to have done whatever it is alleged). Then after a trial, or whatever other mode of determination, a decision is made. And then whatever is decided is presumed to have been the case all along.
One person wins; one person loses.
Of course is would be great if there was a Right. And a Wrong. And everybody knew what was Right. And what was Wrong. And agreed 100% on that. And those who didn't know the answers could read them in the Guardian, or on a blog somewhere.
In such a system, it would be true to say (as you repeatedly do) that any claim which lost was "fraudulent". Because of course everyone already knew at the outset what was Right and what was Wrong. But that is not the system we have.
People are allowed to bring claims. Even claims which have poor chances of success. Because you don't know any better than me whether they are going to win or not. It doesn't make them fraudsters - even if they lose.
Right and wrong.
Domcoop
You don't need to give me a beginners guide on how the English law system works. I have a reasonable idea of the basic theory and practice.
I accept that the adversarial method has been the way disputes are settled and people will always stretch an interpretation of the law to achieve a postive result. Rather like someone arguing over the precise meaning of policy terms to gain the most favourable settlement in a claim on their household insurance would be an example. The judge will come down on one side or another to decide which interpretation is correct in his eyes but if it is arguable, then of course that is not fraud.
It is the excesses and obvious abuses of the system that I take issue with. The law makers obviously recognise that there has been a problem because they have implemented improvements in case management and intervene when things get out of hand. As one High Court judge observed in a case a few years ago - no longer is it the role of the court to act as a referee to any game which the parties choose to play. (I forget the case but that was basically what he said) So we are moving to a system which in practice will perhaps be less adversarial.
And the increased focus on medation as a way to resolve disputes is gaining ground. So like everything else in life - the law is changing to adapt to the times.
Many of the comments I have made here are designed to challenge some of the stubborn attitudes which still remain which tolerate dishonesty. It is all very well two parties to a dispute in a civil court having a disagreement over interpretation but where one party crosses the line and misrepresents and lies to a court to try to win their case, then this should be punished. The line to perjury territory is breached frequently but the prevailing attitude still seems to be that lying is fair game if you can get away with it.
The topic I have mentioned many times is vexatious and abusive litigation. In my view this is also a form of dishonesty because it blatantly manipulates the system to the detriment of genuine litigants. Knowingly bringing a claim which has no merit and is purely designed to harrass and cause expense to others is dishonest in my opinion. The reason I have been hard on solicitors is because they are in a position to know when a claim is vexatious and ill conceived yet continue to take on such claims.
It is issues like this that need to be challenged to bring further improvements in the system. I know you do not like it but the fact is many improvements are initiated by people outside of the profession because they are the people most affected by the current shortcomings. For example, I believe the work of the Libel Reform Campaign has changed the attitudes of top libel judges. Last year defendants won most libel cases. Which Magazine complained about the practice of speculative invoicing and the fallout from that should ensure that the attitude which considers it 'fair game' to send thousands of speculative letters demanding money stays firmly in its place.
I think it has to be remembered that nowadays the legal profession (as with banks and CMCs) is undergoing radical change. People like yourself can either adapt to this change and shape the future - or be seen as an obstacle to progress and ignored.
Don't take it personally. I also regularly campaign against injustice and abuses in the financial markets. In fact, that is where I am off to now. Have a good day.
CMC Practices
It is not shocking that claimants do not have the full grasp of their rights. Throughout most of the legal process, people are ignorant of what they are entitled to and what they are supposed to do. The ones that do know interpret their rights wrong or have a minimal grasp. That is why the lawyers are there to help them along the way otherwise the system and confidence in the system would have been done away with.