PPI Scandal: '25%' Claim Fees Under Fire
Firms that offer help with payment protection insurance claims are facing demands for tighter regulation as they are accused of cashing in on mis-selling practices.
A summit of banks and consumer groups is being held to help raise awareness about the issue as research suggests that a quarter of people are unaware that claims management companies (CMCs) charge a fee.
According to the survey for Which? and MoneySavingExpert.com, 25% were unaware that CMCs cost them money - usually 25% of their claim plus VAT.
Only half of those questioned knew that using a CMC would be no more successful than making the claim themselves, the groups said.
More than half of those who had used a CMC to get back mis-sold PPI said they would be unlikely to use one again, the research found.
The biggest complaint was about value for money, with 37% of consumers unhappy.
UK banks and other credit card lenders have been compelled to contact potential victims of PPI mis-selling and together the industry faces a bill above £10bn according to estimates.
The mis-selling of PPI, which covers a person's financial liabilities in the event of sickness or redundancy, prompted a wealth of CMCs to launch a flurry of advertising campaigns.
Which? and MoneySavingExpert.com, who are attending a meeting with ministers and representatives of the banks, are launching an advertising campaign aimed at informing the public on how simple it is to make a claim.
The groups believe trust has been lost on the reclaiming process and they blame CMCs.
Martin Lewis, of MoneySavingExpert.com, 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."
The consumer groups are calling for the CMC industry to be better regulated.
Richard Lloyd, Executive Director of Which? added: "They're saying (the CMCs) come to us and we'll get you more compensation, faster. It's simply not true.
"What people are ending up doing is paying a massive chunk...of their compensation in fees to commercial companies to do something you can do straightforwardly yourself for free."
what do you think?
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Well Its a massive shame that company's can cash in on vulnerable people, like you and me. Not going into much detail I was asked to join a DMC as they will sort out my payments to creditors with a fee lasting over 5 years around 2 Grand Even More. I have now done this on my own and the creditors have been great and understanding and everything is going on track, thank to money lifeline for giving me great advice which did not cost me nothing don't let the big company's fob you off do it yourself for free and better results every time.
As soon as a cash cow is announced of course the carrion come in to feed. Ditch the loft insulation, or whatever, and get stuck in quick and skim off as much as possible.
Why has it taken this long????? It was obvious from the outset these firms were taking far too much if a chunk for a very simple refund....I wonder how many MP s were consultants or directors to these firms,I also wonder why nobody set up a rival firm to undercut this huge slice of money for doing virtually nothing...why also did the government not just put out a couple of adverts with advice or a draught letter...it stinks as usual....!!!!
did it myself one letter later 2000£ all for me !