Clampdown urged on rogue PPI claims firms
Building society chiefs have called for strong regulation for claims managers after the mutuals report being bombarded with bogus claims.
The Building Societies Association said the number of dodgy claims for mis-sold payment protection insurance (PPI) made by claims management companies (CMCs) soared by 247 per cent in the six months to the end of April 2012.
Rogue firms are cold-calling people and tempting them with the chance of getting thousands of pounds in compensation. But in many cases consumers have never taken out a loan, let alone bought payment cover.
The Financial Services Compensation Scheme has reported that it paid £347m to 86,000 people in 2011-12. It said that 84 per cent of new claims in the year were about mis-sold PPI. Claims management companies use such figures to encourage consumers to put in their own claims. But in the last six months some 22,441 people were in effect misled into believing that they have a valid claim from a mutual, according to the Building Societies Association (BSA).
The association reports pressure-selling tactics by some CMCs, sometimes on doorsteps and particularly directed towards elderly or vulnerable people. Some demand an up-front fee, even when there is no prospect of success, and fail to disclose the percentage success fee that they take, or use the phrase "no win no fee" and still charge consumers in the event of a claim failing.
Adrian Coles, the director general of the BSA, said: "If anything some claims management firms have stepped up their irresponsible, speculative scattergun approach to non-sale claims. Much stronger action is needed if these companies are to stop misleading consumers and putting a pointless and growing administrative burden on BSA members and the Financial Ombudsman Service."
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