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FSA backs Which? campaign against claims firms

The FSA is backing the Which? and MoneySavingExpert.com campaign against claims firms.

The consumer organisations have launched a marketing campaign against unscrupulous claims firms that charge consumers a fee without telling them there is a free alternative.

Speaking to the Chartered Institute of Bankers today, FCA chief executive designate Martin Wheatley threw his weight behind the campaign.

He says: “A significant proportion of these complaints have been driven by claims management companies, and I am sure they annoy you as much as they do me.

“There is no need for consumers to use a claims manager where it is free and easy to complain to a firm directly, so I welcome banks getting together with Which? and Money Saving Expert to make the process clearer and simpler for consumers.”

Wheatley pledged to continue talking with the Ministry of Justice, which regulates claims firms, to tell them about poor practices of claims managers.

He says the best solution is for customers to have confidence that the firms that sold payment protection insurance will take their complaints seriously, treat them fairly and make the process easy for them.

He adds: “Throughout this year we expect firms to write to customers who could be due compensation and explain clearly what their options are.  We will then be testing whether banks are providing redress to consumers where they should be. 

“This has been a sorry episode for many of us, but it is important that we all continue to deliver what is fair for consumers and learn from the experience.”

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Comments

There are 9 comments at the moment, we would love to hear your opinion too.

  1. I have no personal or commercial interest in PPI claims mis-selling but if I was looking to make a claim, who would I trust to best handle my claim in my interests? – the company who sold the product to me or an agent acting on my behalf who is paid a reasonable and disclosed fee only if they are successful?

  2. What would make things clearer is for money-saving expert to clearly declare and show on their website that they are not regulated and authorised to give advice.

    I cannot believe that the FSA is actually backing a campaign from an unregulated firm who clearly in my opinion breaches the Financial Services Marketing Act 2000 on advertising and marketing. Martin Lewis goes on every TV programme he can possibly go on giving financial advice to the masses but does not hold authorisation to do so. Post RDR I feel that this is totally wrong – advice should be left to professional advisors holding the correct authorisation and qualifications whether that is to an individual or to mass education.

    I didn’t create RDR rules but I do expect the FSA to enforce the rules and protect the concept of advice by professionals who are authorised and regulated and to close down any firm that does not hold authorisation and have qualified staff. The too long financial services has been littered by websites that clearly do not have any authorised staff working at them but still attract millions of clicks only for them to be put on to other firms that may be authorised but would not be able to do that type of advertising due to the constraints of the Financial Services Marketing Act 2000.

  3. Dear Anonymous

    A disingenuous posting which seems designed to elicit the response you are getting from me.

    Most PPI providers are rolling over and paying compensation even when it is not due. This is partly down to the sad reality that it is often cheaper to pay up then investigate and then find it goes to the FOS with a resulting case fee.

    Additionally, as the FOS are upholding the vast majority of PPI complaints it is clearly better to go direct than use a claims parasite.

    CMCs simply chuck complaints in, automatically escalate to the FOS without recourse to their merits because it costs nothing to do so.

    I suggest the claims industry should undergo its own RDR because this is one area where the model is most definitlely broken.

  4. Claims Management Companies charge excessive and needless fees for making complaints to firms who have a regulatory responsibility to ensure their complaint handling procedures are clear and easy for consumers to use.
    CMCs in the main do not offer value for money. Do not treat their clients fairly. Do not provide useful or clear advice. They often have no complaint handling experience or qualifications to give advice to consumers. They are making large sums of money through leaching off vulnerable customers and are no better than the individuals and firms who conducted inappropriate sales practices in the first place.
    CMCs are known to charge up to 50% of any award for their ‘work’ on a case. Some even charge their clients additional sums for every letter sent and then send countless pointless and repeat letters to lenders and brokers to increase their profit margins.
    People should pick up their phone and speak to their broker/lender; if their case is not resolved within 8 weeks they should pick up the phone and speak to the FOS. The most they will have to do to make their claim is to make two phone calls and fill out one form. And if they do not feel confident doing that for themselves they should seek help from their local CAB or similar.

  5. Why doesnt MAS use some of its massive advertising budget to inform the public that they dont need to use claims firms?

  6. Instead of backing campaigns Martin, why are you not holding your members to account and asking them why they are not pro actively refunding the consumer? if this was a IFA issue, you can bet your life pro active refunds would be common ( over 90% uphold rates at FOS on some firms), but because its Banks, the FSA turn a blind eye again. Disgrace!

  7. David Cockling 6th May 2012 at 2:27 pm

    I think there are honest an unscrupulous practitioners in this area, but like most things there is the option of DIY or paying someone a fee. Where such a fee is made clear on a no win no fee basis and there are no unknown extras, it’s an individual’s decision to take or leave it.
    Many people may have a phobia of forms or financial matters. While the CAB can help, the reality with this charity is that there are often long waiting periods for an initial appointment where nothing is done then a further long wait to see an adviser who will take any action.
    There are many things we can do for ourselves, but arguing that it is always a waste of money to py someone else to do it is very blinkered. View the price and make your choice.

  8. Anonymous | 4 May 2012 12:59 pm
    A reasonable and disclosed fee – who are you trying to kid – many of these low life ambulance chasing firms charge over 30% plus VAT. How can that be reasonable for a couple of letters and possibly a FOS referal who, I might add, will (99 times out of 100) uphold against the firm regardless of the evidence. It is therefore more than likely that most firms will uphold the complaint because it will save them the FOS fee!

    It is also worth noting that the claimants (in the main) were taken advantage of by the big banks and lenders and now they are being taken advantage of again by these low life firms.

    Additionally I would also say that a lot of claims being received by firms are failing at the first fence as the claimants do not even have PPI!

    To put it simply these claimants are encouraged by poor and misleading advertising that indicates if they have a loan, credit card etc they must have had PPI and as such are entitled to thousands of pounds in compensation. There is even one on the radio at the moment that implies that if you are successful in your claim you could by an expensive electric guitar rather than using it to go towards paying off their loan.

    So do not start going on about how fair and reasonable the costs are as they are clearly not proportionate or reasonable.

  9. Matthew Whiting 8th May 2012 at 2:57 pm

    A good quality CMC will make it perfectly clear how much they will charge. What nobody appears to be questioning is how many PPI customers knew that their bank was taking a commission? And a considerably higher rate than 25%!
    As there are no new arguments here, lets chuck out another old one – if nothing was mis-sold there wouldn’t be any CMCs! Personal Pensions, Endowments, Bonds, PPI…..what’s next that wasn’t mis-sold and no one took a commission for?

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