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Over half of PPI claims firms could leave industry

Trade body the Claims Standards Council says up to half of payment protection insurance claim firms could leave the industry in the wake of the Legal Ombudsman being handed redress powers.

The Ministry of Justice this week announced it will give responsibility for complaints against CMCs to the ombudsman from next year.

The Legal Ombudsman is funded by an industry levy and £400 case fee, with firms receiving two free cases a year. It says the redress scheme could cost the CMC industry millions with the possibility of thousands of complaints.

The ombudsman can award compensation of up to £30,000 or take action to ensure a case was properly resolved. Officials are considering increasing the limit to £50,000.

Consumers can complain to the Ministry of Justice, which regulates CMCs but does not have powers of redress.

There are about 3,000 claims management firms in the UK, with 2,000 dealing with PPI claims.

CSC policy director Andrew Wigmore (pictured) says: “You could see well over a thousand leaving this industry pretty rapidly and it is mainly in the PPI area. The ombudsman will do a good job and they are going to be absolutely on the money with this from the start.”

The ombudsman says it will publish complaints data made against claims management firms and name individual firms who are found to be repeat offenders.

Chief Legal Ombudsman Adam Sampson says: “The cost for claims firms could be anything from a few hundred thousand pounds to over £3m but we do not know for sure at the moment. To a significant degree a lot of it is in the industry’s hands as we will only investigate complaints that are not resolved.”

Sampson added that if a high number of PPI related claims are unresolved then the ombudsman could end up dealing with thousands of complaints.


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

  1. This is pretty amusing. Finally the ministry of justice is delivering some justice. It’s just morally wrong what claims management companies have been doing. The general public have been stung once by financial institutions doing PPI mis-sells and stung twice by claims management companies charging over £1000 for basically posting an application an individual filled in themselves. What goes around comes around!!!!

  2. Good. Don’t let the door hit you on the way out.

  3. Why only a thousand. Get rid of all these bloodsuckers ! It amazes me that there is, supposedly, a Trade Body (Claims Standards Council) to represent these leeches. The trouble is that those firms that are left will be the worst of all – operating from overseas and with no regard for UK regulators or the courts.

  4. Good news – that’s the first step. Now start putting fraudulent members of the public in the dock when it becomes obvious that their claim is frivolous, vexatious or downright dishonest. Only then will we get back to some sort of normality.

  5. So far, so good. Now start putting claimants in the dock when they make frivolous, vexatious or deliberately dishonest claims.

  6. I bet most of them if not all are limited companies who will either call in the administrators or simply close down and leave the complaining public high and dry to to go directly to the legal ombudsman. What will this mean for the industry ? Higher fees and levies to settle the complaints against the claims companies. Bloody marvellous.

  7. Good riddance.
    I echo Bills comments about claimants, some of whom have written wicked lies just because they think they can get away with it.

  8. Clearly a nation mourns..

  9. Great opportunity here. To set up a claims company to make claims against existing claims management companies. We could charge the client 25-30% of any compensation awarded and it’ll be a good couple of years before the regulator catches up with us. Who’s with me?

  10. Anon @ 11.22


  11. Now all we need is a properly balanced FOS and we can rid the financial services world of fraudsters, opportunists, con men and chancers.

  12. Matthew Whiting 31st August 2012 at 1:40 pm

    Unfortunately Alan i dont think this covers any of the banks!!!

  13. @ Matthew Whiting.

    Sorry, my mistake. How silly of me.

  14. While I share the general sentiments as regards some sense of balance being introduced, before we get carried away I’d just wonder who’ll be picking up the tab for all those upheld complaints against departed firms.

    Hopefully not, but it would be the ultimate irony if the bill fell to FSCS, and was then partially borne by IFA’s.

  15. It occurs to me that there has to be mileage in handing out template complaint letters for consumers to send to the ambulance chasers and legal ombudsman.

    £400 a go is less than half what FOS will charge for a PPI complaint but at least there will be a chance to hit back.

  16. Can someone explain to me what complaints can be brought and why fines would be high for CMCs?

    Im struggling to see it save for fraudulent firms who of course would not pay any fine levied and simply close.

  17. All of you lot above are gutted that you didnt make a packet out of it !

  18. What a load of claptrap written by most of the commentators. Not one person identified one actual potential complaint against a CMC.

    No one mention that the real crooks here are the banks, lenders and the brokers that sold this worthless PPI insurance in the first place then when called to account the lenders and banks side stepped the claims mea culpa it was not us it was the brokers who where to blame. The brokers then went bust and they dropped the claims for miss selling onto the FSCS.

    One final point, many PPI claimants don’t know they have PPI on their financial products in many cases it’s buried in the paperwork, which they don’t have and that the banks refuse to help on. I think the winging about PPI claims is pathetic and the sooner the financial services industry is cleaned up properly the better.

  19. Anon @ 2.38
    I have just made a complaint to MOJ & ICO re a very unscrupulous CMC.

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