by Mark Johnston
Last year banks paid out around £1.9 million to ‘victims’ of mis-sold payment protection insurance (PPI).
Many banks have stated that they have always been fully committed to providing appropriate compensation to customers who were wrongly sold payment protection insurance (PPI). However, they also state that the involvement of claims management companies means that customers end up paying unnecessary fees to them.
Therefore banks are now beginning to complain that their efforts to compensate genuine ‘victims’ of mis-selling have been made near impossible by these claims management companies who promise to pursue claims on a no win no fee basis.
Figures are showing that banks will have to pay out around £7 billion for genuine claims, but it is estimated that 1 in 4 of the complaints made by claim handling companies are false.
Richard Lloyd, executive director of Which?, said “if people use claim management companies they could be stung twice. They are stung once when sold payment protection insurance and they will be stung again if a claims management company charges them fees of 25% or more for doing something they can do themselves”.
According to research a quarter of Britons said the claim firms acting for them had not made it clear they would take a fee from them.
The chief executive of the Lloyds banking group, Antonio Horta-Osorio added “many customers did not realise that they would end up paying up to a third of their compensation to these companies”.
Martin Lewis, founder of moneysavingexpert.com, also stated “if people make a rational decision to give 30% of what they are due to a claims handling company in full knowledge they could claim this themselves, i’ve no problem. Sadly it seems very few are in that position”.
Banks have however accepted that they have worked successfully with ‘some’ claims management companies but the dire lack of regulation means it can be hard to tell ‘legit’ firms from the rest.
Therefore Britain’s banks are to call on justice secretary Kenneth Clarke to clamp down on unscrupulous claims management companies.
The service offered by theses firms is unnecessary as refunds are available either by a simple request to the original seller of the insurance or failing that through the Financial Ombudsman Service which has a process designed to be easy for consumers to use.
Recent research has shown that many people do not realise that there are simple, easy to follow steps available to reclaim their money for free. Instead they turn to claims management companies.
Banks and credit card companies have now agreed to make the claims process for mis-sold payment protection insurance clearer and simpler and the complaint procedure will be standardised to improve the process of claiming compensation.
These new measures are believed to be designed in order to cut claims management companies out of the compensation.
People who believe they were mis-sold these policies can apply for compensation by writing to the providers themselves.
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