Consumers using claims management firms to pursue a complaint for Payment Protection Insurance (PPI) mis-selling stand to lose around 25 per cent of any compensation on average.
The figures from the Financial Services Compensation Scheme – an official government body – were compiled over three years and highlight for the first time the massive fees taken by so-called no-win no-fee claims firms.
Although the number of claims submitted directly to the FSCS more than doubled from 2010 to 2011, the number from claims management companies outstripped the number from individuals in both years by more than three to one. But analysis shows the success rate through third parties is just under 87 per cent, compared with just over 83 per cent for individuals.
"Claims management companies take a sizeable part of the pay-out and are no more likely to make a successful claim than consumers can on their own," the FSCS chief executive Mark Neale warned. In total the FSCS says it has awarded £77.5m for PPI misselling and average individual claims stood at £4,534. "Consumers should be aware claiming compensation from the FSCS is free and the process is not difficult," Mr Neale added.Reuse content