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CMC trade body slams calls for tighter regulation

The trade body for claims management companies has attacked Which? and MoneySavingExpert.com for “siding with the banks” after the consumer groups and the British Bankers’ Association wrote to the Ministry of Justice calling for tighter regulation of CMCs.

Earlier this week, Money Marketing revealed the three bodies had written to Justice Secretary Ken Clarke complaining there was “significant evidence” of rule breaking by CMCs and calling for urgent action to improve the department’s regulation of them.

CMCs have been criticised for charging up to a third of compensation payouts when consumers can submit their own claims to the Financial Ombudsman Service for nothing.

In October 2010, the BBA launched a judicial review challenging the FSA’s payment protection insurance redress measures, but the High Court found in favour of the regulator.

Claims Standards Council policy director Andrew Wigmore says the consumer groups should be “ashamed of themselves” for “siding with the banks” accusing them of trying to deny consumers choice in how they make their claims.

He says that the MoJ is “extremely aggressive” in trying to stop abusive practices by CMCs that do break the rules.

He says: “For organisations that pride themselves on consumer protection and who have campaigned for consumer rights to side with the banks on this issue is utterly disgraceful, their current action to protect the banks against the consumer right to make a claim shows breathtaking ignorance and a total disregard for the consumer they profess to protect.

“The consumer is not stupid and they are fully aware that you can make a claim for free but they choose to use a third party, someone to fight on their behalf – that is the consumers choice. Are Which? and Lewis wanting to deny consumer choice as well? It seems so.”

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. Duncan Carter 16th May 2012 at 7:44 pm

    More snouts in the trough!

    I have no sympathy whatsoever for banks but CMCs are just bottom feeders. They do very little for large commissions and simply and cynically exploit an inherently flawed compensation system that bears no resemblance to a legal process.

    Well done MoJ I say; sounds like they’re being effective judging by the whingeing of the ‘trade body’!

  2. The Claims Standards council is poorly named.

    Most CMCs exhibit the lowest possible standards where their antics border on fraud and extortion.

    MSE and Which? are quite right to point out that consumers do not need to use these shysters.

  3. Why does the CMC assume that because which is not siding with them it must be siding with the banks?

    Which has taken the third option which is to side with neither as ultimately neither benefit consumers.

  4. CMCs have had carte blanche to do as they please. The thought of tighter controls is frightening the life out of them.
    They are selling a service and as such should be as tightly regulated as any in FS.They should also pay to lodge a complaint with FOS.
    A hindsight review into their practices is also called for and redress should be paid where it is due.

  5. Some Banks play fair–some do not. It must surely be the consumer’s right to elect to consult a solicitor or CMC if they wish.
    In the end it all comes down to one thing—CMC companies advertise. That attracts more claims and the Banks don’t like that at all.

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