The Building Societies Association (BSA) is calling for the Ministry of Justice to be given ‘teeth’ to regulate claims management companies (CMCs).
The BSA wants consumers to be covered under a powerful ombudsman scheme, such as the Legal Ombudsman Service, and for CMCs to be charged a fee by the Financial Ombudsman Service (FOS) in cases where a claim proves to be bogus.
According to the BSA, false claims to mutuals for mis-sold payment protection insurance made by CMCs have increased by 247% in the six months to the end of April 2012, compared with the previous six-month period.
Ministry of Justice PPI warning to CMCs
Last August, the Ministry of Justice (MoJ) issued a warning to CMCs stating: ‘Submitting claims to the Ombudsman Service or lenders where there is no element of PPI results in valuable time, money and resources being used up in pursuing these complaints unnecessarily.
‘It is therefore essential that you undertake all reasonable checks before submission to the Financial Ombudsman Service or lenders in these circumstances. Any business found to be submitting large numbers of claims where there is no PPI will be subject to investigation and appropriate enforcement action.’
Adrian Coles, director general of the BSA, commented: ‘It is clear that the Ministry of Justice simply does not have the powers that it needs to effectively control the rogue elements in this industry. They do not even have the power to fine.’
You can put in a PPI claim yourself for free
Many people were sold a PPI they could never claim on, while others didn’t know they had the product in the first place. If you can answer ‘no’ to one or more of these questions, then you may have been mis-sold PPI and could put in a complaint directly to your provider using our free PPI tool.
- If the insurance was optional, was that made clear to you?
- Were you told about major exclusions such as pre-existing medical conditions?
- Did the adviser make it clear that you would have to pay for the insurance up front in one single payment? Did the adviser explain that the insurance cost would be added to the loan and you would pay interest on it?
There are other ways you might have been mis-sold PPI – check out our PPI mis-selling checklist for more questions to ask yourself.
Tougher claims management company regulation needed
Last month, Which? and MoneySavingExpert.com called on the government to introduce tougher regulation of third party fee-charging complaint handlers.
Which? executive director Richard Lloyd said: ‘We now need to see the government raise its game and speed up its plans to tighten up regulation of unscrupulous claims management companies who are exploiting consumers who just want to claim back what is rightfully theirs.’
Our research found that one in four people didn’t know that claims management companies (CMCs) took a fee, while only half knew that using a CMC would be no more successful than making the complaint themselves.
We’re also working with banks and building societies to improve consumers’ access to key information about PPI complaints procedures, as well as to make it easier for consumers to put in a PPI complaint directly to their loan or credit card provider.