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MoJ launches crackdown on PPI claims chasers

MoJ Ministry of Justice 480

The Ministry of Justice is launching a crackdown on unscrupulous claims firms targeting payment protection insurance misselling claims.

The department has set up a specialist unit to investigate PPI misselling claims firms and agreed memorandums of understanding with the FSA, Financial Services Compensation Scheme and Financial Ombudsman Service to share information and work more closely.

It has also developed a reporting template for use by credit card companies, banks and building societies to facilitate the exchange of information about businesses’ activities.

In its claims management regulation annual report for 2011/12, the MoJ says it made 150 audits and visits to firms and 409 have been warned, suspended or seen their authorisation cancelled.

MoJ head of claims management Kevin Roussell says: “The mass misselling of PPI has seen a surge in the number of companies operating in the financial claims management sector. Poor practice is rife among some claims management companies that are falling over each other to get claimants’ business.”

The number of claims firms targeting financial services grew from 946 in March 2011 to 975 in March this year.

Which? executive director Richard Lloyd says: “We need to see real action from the Government to speed up the tougher regulation of claims management companies so that people who have genuine claims do not get robbed twice.”

The MoJ is also warning that claims firms are targeting mortgages, unenforceable consumer credit agreements and missold investments as they seek to exploit new areas.

The MoJ received 8,521 consumer complaints relating to financial services claims firms in the year to March, which accounted for 93 per cent of all complaints, despite only making up 17 per cent of firms.

It has also received more than 1,000 complaints from financial services companies about claims management firms.

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Comments

There are 19 comments at the moment, we would love to hear your opinion too.

  1. Everytime we receive a false claim for mis-selling PPI we send the details to the MOJ and they appreciate the information which helps them identify those firms that are not even trying to obtain some sort of evidence that a policy was sold.

  2. These firms are only there because the FSA felt the banks were OK to sell PPI insurance to anyone with a pulse and a bank product.

  3. Rob Derry (Brunel Mortgages & Loans) 15th August 2012 at 11:07 am

    I will believe it when I see the results. We have only ever done a handful of PPI policies and haven’t been authorised for general insurance now for more than 5 years. We took that decision because we are a B2B mortgage and loans master broker. It’s not our job to sell insurance to the broker’s customer.

    However, we get about half a dozen “complaints” a week from claims companies who are absolutely certain that their customer was mis-sold PPI after we didn’t outline the terms, told them it was compulsory, didn’t tell them it was added to the loan etc, etc. Not surprisingly, about 99.9% of them never even had PPI.

    How does a professional, regulated firm get away with representing their client without even getting some basic facts like “Have you actually got any PPI?” sorted out first? A solicitor would ascertain if there was any injury or loss before pursuing someone in an accident claim, so why can’t the claims firms be made to do the same?

    Each “complaint” of course takes time to deal with and some of the firms want us to confirm in writing that the PPI was never sold. I don’t see why we should waste any money on postage when there is no complaint so it’s an email or nothing from us.
    If you went in to an electrical store and complained about the baked beans you bought and they said “we don’t sell baked beans” and you asked them to confirm that in writing, the men in white coats would be round in no time.

    The entire claims industry is a farce. Disappointingly, many of the firms appear to be owned and run by former brokers and IFAs. Many of whom were selling endowments, pensions and PPI in the past.

  4. About time too. We’ve had a dozen complaints relating to PPI this year and we’ve never recommened a PPI policy !

  5. Wow! It takes nearly 10,000 complaints from consumers and companies for them to start looking into something they should have been on top of in the first place. I suppose in a world of unaccountable splurging of tax payers’ cash you might as well get the summer hols out of the way first 😉

  6. Derek Bradley ceo PanaceaIFA 15th August 2012 at 11:16 am

    On the 20th June Alan Lakey and I met with Kevin from the Ministry of Justice’s claims management regulation unit to discuss the problem of CMCs issuing spurious complaints, which have become more prevalent in the wake of the payment protection insurance mis-selling scandal. We found that:

    The MoJ has shut down 734 CMCs (in the year to the end of March)
    The MoJ has doubled the amount of staff to deal with this issue
    An estimated 75% of complaints to the Financial Services Compensation Scheme come from CMCs and 50 per cent of claims to the Financial Ombudsman Service are from CMCs.

    We proposed a number solutions to the MoJ and I hope this may be the start of some real action to rid the world of this menace.

    I have to say that if successful, considerable industry thanks is due to Alan who has done so much research to provide the MoJ with the ammunition to take up the fight.This is about seeing correct practice for legitimate claims, not a way of fraudulently collecting money as you pass go at somebody else’s expense often with no evidence at all.

  7. When the likes of major law firms and solicitor companies started opening up PPI claims arms it was pretty obvious they had created a gravy train which would be exploited by the less scrupulous firms that sprung up. My question is; why has it taken this long for the MOJ to do something about the rip off merchants, or have they just ignored the problem until it became so bad it had to be tackled?

  8. We had one from someone who wasn’t, and never had been, a client!

  9. As far as I’m concerned, if the PPI claim company cannot put together half decent evidence of a missell and they vexatiously make a claim, that’s trying to obtain money by deception/fraud/attempted theft. It should be treated as a criminal offence under the Theft Act and dealt with by the police.

    Maybe where this is happening IFA’s should report it to the police as attempted fraud and see what reaction that they get.

    I havn’t had a claim of any kind come through to me, but if a letter came through from a company and I had never made any relevant product sale, I would report it to the police and ask them to investigate. How far I got would be another question, but if the claims company director got a call from the police, it might make him sit up.

  10. When the likes of major law firms and solicitor companies started opening up PPI claims arms it was pretty obvious they had created a gravy train which would be exploited by the less scrupulous firms that sprung up. My question is; why has it taken this long for the MOJ to do something about the rip off merchants, or have they just ignored the problem until it became so bad it had to be tackled?

    It may have something to do with the munber of MPs who are lawyers and therefore partners in law firms?

  11. So re-assuring to know that the stable door will now be eased shut.

    If only we knew where most of the horses had gone….

  12. Justin Credible 15th August 2012 at 2:06 pm

    @ Derek Bradley (and Alan Lakey). You are absolutely correct, you and Alan have done great work in bringing this to the attention of the MoJ. Sadly they could not (or would not) see it themselves. On one hand it is a massive positive that 734 CMCs have been shut down, it is rather frustrating that they were presumably authorised by the MoJ in the first place.

  13. Unfortunately I cannot see how any action can be truly effective now, as I have personally received 2 calls from CMCs in the last week. I asked each where they were based and neither were in the UK (Holland seems favourite at the moment).
    So how can the MoJ stop foreign based companies breaking UK codes of conduct?
    By the way – I haven’t taken any PPI in the past though they start by presuming I have.
    When I asked how they got my number I was told from the ‘Houseowner’s register’ which I don’t believe even exists in a central format!
    It really is about time a small fee was inroduced for all claimants, refundable if successful – that might at least stem the spurious nonsense claims.

  14. Justin Credible 15th August 2012 at 4:41 pm

    @ Anon 3.30pm – I’m afraid the small fee doesn’t put people off when the prospects of this summer holiday being paid for is dangled in front of them. We had a complaint rejected by our previous network where the claimant had had a heart attack but when setting up the policy decided that it was of no concern to the insurance co that he had already been diagnosed with heart issues (his words and hence the clear rejection). A few weeks later it came in again as a PPI complaint would you believe from a CMC who had stiffed him for a £249 fee upfront, they then went bust taking his fee with them. I had the file ready to go to the Police but to be honest felt sorry for the guy, he had been daft on the non disclosure and seemed at his wit’s end when the CMC obviously took advantage of him. Directors of CMC are probably setting up their new company now…..

  15. What will be done about CMC’s attempting to skirt the MoJ’s specific rule against cold calling, by employing unregulated “marketing companies” to do their cold calling for them?

    Like many other people, I receive several cold calls on my office and home phones and texts to my mobile phone every week, even though I’ve never had PPI. The practice is rife.

    And still we don’t know why the job of regulating CMC’s was shucked off onto the MoJ instead of being taken on by the FSA.

  16. The MOJ are aware that many claims parasites use introducer companies. Thes ecompanies are frequently offshore and, in any event, the MOJ has no jurisdiction over them.

    I have reporte done particular fraudster to SOCA and received a crime number. But then…nothing happened, the policy clearly consider this a lightweight crime and not really worthy of their attention.

    The next attempt at fraud will involve me in billing the fraudster company for my time and effort in dealing with the attempted fraud. If the bill is not paid then the small claims court. let’s see how that turns out.

  17. No win no fee should be banned as it corrupts the public into making claims.
    Companies are round the clock cold telephone calling advertising in newspapers etc trying to instigate people to put in claims.
    If they do win they take 40-50% of the claim as a charge.
    How many do they win?

  18. reinsurance companies 20th August 2012 at 6:39 am

    Thanks for the write up. I definitely agree with what you are saying. I have been talking about this subject a lot lately with my father so hopefully this will get him to see my point of view. Fingers crossed!
    http://www.devonshiregroup.com/

  19. Hello,
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