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Categories:Advisers,Regulation

Claims firms submit three-quarters of FSCS PPI claims

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Over three quarters of consumers submitting payment protection insurance claims to the Financial Services Compensation Scheme do so through a claims management company.

Figures from the FSCS reveal that between 2008 and 2011 the FSCS received a total of 21,575 PPI claims against firms that sold the insurance that cannot afford to pay the claims against them.

Out of this total 16,387 compensation claims came from claims firms,  and just 5,188 were made directly by the consumer.

The FSCS has paid out £77.5m for PPI claims, at an average payout of £4,534.

Claims firms operate by taking a cut of the compensation of any successful claim, which can be 25 per cent or more.

The FSCS points out the uphold rate is similar regardless of how claims are submitted with 87 per cent of PPI complaints upheld that came from a claims firm, compared to 83 per cent for claims directly from individuals.

FSCS chief executive Mark Neale says: “Consumers should be aware claiming compensation from the FSCS is free and the process is not difficult.

“Of course, some people may prefer to pay someone to submit their claim for them. The choice is theirs and they should understand what they will get for their money. Claims firms take a sizeable part of the possible payout and are no more likely to make a successful claim than consumers can on their own.”

Earlier this month figures published the Financial Ombudsman Service showed that claims firms accounted for nearly half of all cases received by the FOS during 2011.

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Readers' comments (6)

  • As with other offshoots of the RBS who have been found guilty of altering and manipulating claims and complaints data - I was sold PPI by the RBS / NatWest even though I specifically wrote and rejected the policy. Did not find out they had added it until over 3 years later when I asked to have a statement which they had not sent before - and wondered why the balance was not as low as I calculated (i.e., zero !). Seems that they added about £1400 of up-front PPI plus interest contrary to my specific written instructions - and having been caught out, all they wanted to offer me back was £350. My solution was to tell them that their mis-sale of PPI and interest effectively wrote off the outstanding balance - and the excess they now owed me would be reclaimed from them in atlernative ways. They are still battling and arguing - and most non-financial people would have thrown the towel in. I say "Good Luck" to the claims companies - without them the banks would have got away with most of their mis-sales, as the majority of people would never go through all the bother in the first place and be affraid of taking on their bank, etc.

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  • I don't understand how this is working. Surely, any complaints should in the first instance be made to the seller of the allegedly mis-sold product. The seller either accepts the complaint and pays compensation or it rejects the complaint and, if appropriate, the matter is then referred to the FOS. If the FOS upholds the complaint, the seller is ordered to pay compensation.

    As I understand it, the only basis on which the FSCS pays out is if the seller is for some reason unable to meet its obligations. Given that the vast majority of MPPI mis-selling was committed by banks and building societies, virtually all of which are still in business, why has the FSCS paid out £77.5m? Surely there haven't been as many as 17,000 upheld complaints on which the mis-sellers haven't been in a position to pay the relevant recompense?

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  • The thrust of this article is the comparison between claims submitted by agents and direct from the consumer. The FSCS probably finds claims other than 'direct' irritating. So why not break down the figures on the basis of success? I would guess because that would show the overwhelming successful claims are intermediated?

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  • The PPI scandal has been the biggest ever shot-in-the-arm for the claims parasites.

    Unlike the endowment non-misselling episode the parasites have found PPI to be easy pickings and pretty much a guaranteed income producing opportunity.

    Is it that consumers don't understand how to claim?

    Is it that consumers really believe that these people add value?

    Is it that consumer ignorance is so endemic that the CMS's can persuade them to sign up?

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  • Why can they not afford to pay claims if they have been taking the premiums.

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  • Please give me more information about this blog.
    ____________________
    Allen

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