/ Money

Letter to the justice secretary – clean up claims companies

Three hands signing

We’ve written to justice secretary Kenneth Clarke. We’re challenging the government to tackle the claims handling industry – the companies who act on your behalf to manage claims such as PPI mis-selling.

The letter was co-signed by MoneySavingExpert.com founder Martin Lewis, chief executive of the British Bankers’ Association, Angela Knight, and Which? chief executive, Peter Vicary-Smith. We’re also requesting a meeting with Mr Clarke to discuss this issue further. Here’s what was said:

‘At a recent meeting senior representatives of MoneySavingExpert.com, Which?, financial services providers and the Financial Services Ombudsman discussed ways of improving confidence in the Payment Protection Insurance complaints system. This is a large scale issue, with almost £9 billion provisioned by institutions and affecting millions of consumers.

We agreed that more needs to be done to help those who have been mis-sold PPI, and together have committed to further action. However, we also believe the government has a critical role to play, to help consumers and the industry, by ensuring third party complaint handlers are properly regulated and bad practice is stamped out. Whilst we acknowledge the recent steps taken by the Ministry of Justice in this area, we believe further action is urgently needed.

There is significant evidence of rule breaking within the claims management sector, an industry that has grown significantly, and we believe that regulation and supervision of it has not kept up. Recent research from MoneySavingExpert.com and Which? found that a quarter of people did not know that CMCs take a fee, and only half knew that using a CMC would be no more successful than making the claim themselves. The result is that consumers are losing out now and will continue to do so unless action is taken.

Misleading advice, unfair contract terms and a lack of transparency about fees are all too common and there is very little consumers can do to gain redress when they occur.

It is likely that the bulk of the money being set aside for PPI redress will be distributed over the next year, so it is essential that urgent action is taken to encourage better supervision, self-regulation, tighter regulation and enforcement action against CMCs by the Ministry of Justice.

We are also concerned that the proposed consultation by the claims management regulator on the Conduct of Authorised Persons Rules is being delayed. Any delay in bringing forward much needed changes to help drive out the poor practice of some CMCs will only lead to further consumer detriment and additional costs across industry and the Financial Ombudsman Service.’

If we get the chance to meet Mr Clarke – and we’ll be pushing to ensure that we do – what would you like us to add to the agenda to ensure your views are heard? How do you think the badly behaved claims management companies should be dealt with?

Comments
Member

I dont understand why someone can’t just tell the banks to refund money to everyone they “ripped off”. They must know who was mis sold and how much otherwise how could they set aside all that money.

I’m even more amazed the Government haven’t set up their own claims company as a way of making a little extra money.

Member
Rosie says:
15 May 2012

Having worked in financial services as a qualified – through lots of study and experience – “insurance professional ” (not many of us around!!), there’s a lot I could say on this. If this is to be specifically related to the claims management companies (and not the insurers) then I’d start with them being banned from making “cold call” phone calls and sending text messages touting for business.
Of course, they’ve obtained our contact details from somewhere and it’s clear that several major financial services organisations at least are, when they sell on credit card and loan debts to other companies, then passing on those people’s details as “leads” to claims management companies. This practice needs to be stopped immediately. (It’s the same as what used to be reputable motor insurance companies selling on leads from accident details to accident claims companies!).
The financial services industry used to be reputable, respected, and people were happy to take properly qualified financial advisors’ advice. Now insurance is about profit, not risk, and the public can’t be expected to take out insurance, pensions or anything else whilst the industry is in such a mess, with so few managers and employees who actually have any technical knowledge, or business morals!

Member
David Smith says:
17 May 2012

This may sound pretty stupid but, not having kept satements from years ago, I really dont know if I was mis-sold insurance by my Bank. If I write to ask them if they did sell me insurance, are they obliged to tell me the truth. Failing that what else can I do? Can anyone advise me, please?

Member

Hi David, we’ve got lots of advice here and you can use our PPI claim-back tool: http://www.which.co.uk/campaigns/personal-finance/the-ppi-campaign/claim-back/

Sure, your bank should be able to tell you if you had PPI.

Member
Linda says:
17 May 2012

I used the WHICH PPI claim, as yet I am still waiting on any reply. Its been two weeks and nothing. Alliance and Leicester was my bank now owned by Santander. I know I only have a few hundred pounds to claim but money is money. What happens if they refuse to pay back? Where do I go from there?

Member

Hi Linda – your PPI provider has up to eight weeks to respond to your complaint. If you don’t hear anything by the end of the eight weeks, or if your complaint is rejected, you can take your case to the Financial Ombudsman Service who will investigate your claim.

Member
Linda says:
17 May 2012

Thankyou for the advice Charlotte

Member
Brian says:
18 May 2012

This whole business of selling on data has got out of hand. I received a text message
from one of these sharks telling me that they have reviewed my “accident” and I could make a claim. I haven’t had an accident.! They got a very brief return message.
It seems to me that we have yet another quango failure letting down the people of this country. Thank you WHICH? for looking after our interests!

Member

Brian – if you haven’t had an accident, where is the selling on of data in your case? The companies just send out texts and email to random groups of numbers and emails in the hope that someone will take up their offer (for a fee of course). The worst thing any recipient of a message should do is reply in any way – that just confirms that they have a live contact which can be sent more spam!! Just delete the message and get on with life 🙂