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CMCs 'being shunned' for PPI claims
Consumers are increasingly shunning no-win no-fee claims firms as they chase compensation over the mis-selling of payment protection insurance.
Fewer people are turning to claims management companies over mis-sold PPI, figures show
Consumers are increasingly shunning no-win no-fee claims firms as they chase compensation over the mis-selling of payment protection insurance.
The Financial Ombudsman Service (FOS) said that up to half of the 85,562 new PPI complaints made in the first six months of 2012 were made directly by consumers without paid-for representation, against less than 20% a year ago.
The number of PPI complaints has risen 73% since the second half of 2011, with the FOS now handling 3,000 calls on the issue every day.
Claims management companies (CMCs) take around 25% on average of compensation paid out to cover their fees, according to the FOS.
They have been criticised for the high levels of their fees and onerous contracts, while some banks have also claimed these firms have been responsible for a swathe of bogus complaints.
The latest data from the FOS revealed that new PPI complaints continue to flood in despite the shift away from CMCs - with PPI cases making up 63% of total complaints received by the ombudsman in the six months to June 30, as up to 1,500 new cases arrived each day.
The total number of complaints to the FOS rose to 135,170 in the half-year, up 27% on the previous six months.
The FOS upheld 71% of all PPI cases in favour of the consumer, which is a far higher success rate than for other types of complaint.
Lloyds TSB saw the highest uphold rate, at 98%, followed by MBNA Europe at 97%, Barclays at 93%, CitiFinancial at 93%, Welcome Financial Services at 92%, Lloyds-owned Bank of Scotland at 90%, HFC Bank at 90% and NatWest at 89%.
The industry has set aside around £10 billion to cover claims being made by people who were sold insurance they did not want or need, in what is predicted to become the biggest consumer financial scandal of all time.
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