Financial Conduct Authority chief executive designate Martin Wheatley says claims management companies are a “cancer on the industry”.
Speaking at an Association of British Insurers conference on conduct regulation in London this week, Wheatley said the FSA’s failure to levy proportionate fines for the misselling of payment protection insurance and banks’ aggressive approach to PPI sales have led to the growth of the claims management sector.
He said firms and consumers are now paying the price of PPI misselling.
Wheatley said: “The industry is now unpicking that at huge cost – a cost of billions to the industry and a cost to all of us who are bombarded every day with claims management companies saying ‘You too may have been missold’.
“We have created this problem for the industry, that because it was not dealt with earlier, because the industry did not respond to our signals, it has become a huge problem. We have created this new cancer on the industry, which is the claims management companies who are driving lots of claims which are not necessarily valid.”
Plan Money director Peter Chadborn says: “These firms have been allowed to run riot, so I would agree with Martin Wheatley’s choice of words.”