Claims firms submit three-quarters of FSCS PPI claims
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.