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.