Lloyds Banking Group is pushing justice secretary Chris Grayling to change the law so that claims management firms have to cover the cost of lodging invalid or bogus payment protection insurance claims.
The Telegraph reports Lloyds chief executive Antonio Horta-Osorio wrote to Grayling in November saying while the bank is prepared to continue to pay its £850 case fee to the Financial Ombudsman Service for legitimate PPI claims, claims firms should face a penalty if cases are filed inappropriately.
The newspaper says following Horta-Osorio’s letter the Ministry of Justice is understood to be in talks with the British Bankers’ Association to discuss who covers the cost of false claims.
An MoJ spokesman told the paper: “The Government is stepping up its efforts to tackle the compensation culture, and to ensure effective regulation of claims management companies.
“We are looking closely at ways in which we minimise the financial burden on banks, which is created by the poor practice of some claims management companies.”
He added Grayling has responded to Horta-Osorio in the last week, but did not give details about the reply.
Firms currently have to pay a standard FOS case fee of £500 which is charged for the fourth and any subsequent complaint during the year. Last April the FOS also introduced a £350 supplementary case fee for PPI complaints to the FOS where businesses have more than 25 PPI complaints a year.
The FOS is proposing to increase its standard case fee to £550 from April, but to increase the number of free cases from three to 25. The supplementary £350 PPI case fee, paid when the case is referred to the FOS rather than when the case is resolved, is set to remain in place for at least another year.