You have to love the British Press and how they report a story, but that is what sells newspapers.

In the Headlines today :

The Independent : Claims firms face tough new regime as MoJ cracks down

The BBC : Claims management firms face tougher rules

The Telegraph : Claims management companies to be held accountable by Ombudsman

We take a look at the story in the Independent and add our comments.

 Claims firms face tough new regime as MoJ cracks down

Claims management companies (CMCs) could be forced to pay back millions to consumers under new plans announced yesterday by the Ministry of Justice.

The MoJ has handed over responsibility for dealing with complaints about the firms, which handle compensation claims in areas such as payment protection insurance mis-selling and personal injury, on to the Legal Ombudsman. The change will mean CMCs could be forced to pay up to £30,000 in compensation to disadvantaged consumers, and it is believed the limit could be increased to £50,000.

At present CMC customers must lodge complaints with the Ministry of Justice, which regulates the industry but does not have the power to arrange compensation. The new rules – to be enforced from 2013 – will give consumers the chance to claim redress against rogue CMC firms for the first time.

However, the MoJ will continue to regulate the industry through its Claims Management Regulations Unit. Kevin Rousell, the head of the unit, said: “We will continue to target those CMCs who do not comply and we will work in partnership with the Legal Ombudsman to root out those CMCs that take advantage of consumers.”

This is Great News and welcomed by CMC’s

The MoJ has been cracking down on CMCs following public anger over a rising tide of unwanted texts and cold-calling from unscrupulous firms aiming to profit from the £10bn bank mis-selling scandal relating to payment protection insurance (PPI).

Maple Financial does not send texts or cold-call, however this is a legitimate practice “unwanted texts and cold-calling from unscrupulous firms”. To tell you how this works, your Council sells your information, Yes you read that correctly, Your Council legitimately sells your information, as well as your mobile phone provider. If you do not want your information sold then when you next get your letter for election registration, remember to tick the box, Not to be Made Public. CMC’s do purchase these legitimately, if you want to direct anger, direct it to your Council and Mobile phone provider.

Rogue firms make promises of payouts for consumers, even though many are not even eligible for compensation. The Financial Ombudsman warned this year that people in line for compensation had no need to use CMCs as they could make claims themselves without going through a third party.

This should definitely stop, however according to the Building Society Association there were 22,441 bogus claims made, this is in contrast to 977,150 upheld claims.

It forecast about £50m of PPI compensation it will award this year will needlessly go to claims management companies. CMCs charge about 25 per cent of the compensation payout.

Many CMCs also encourage people – through adverts on TV, newspapers and the internet – to sue for personal injury compensation, and for other losses, even though they may have not been involved in an accident.

Accident and Medical CMC’s have existed for over 10 years, is it right to add Financial Products into this sector.

The MoJ has banned or shut down more than 700 rogue CMCs but there are still around 3,000 in existence in England and Wales. Mr Rousell said the MoJ would now focus on improving standards and taking wider action on rule-breaking CMCs.

Last week it published proposals to ban CMCs from taking fees from customers without a written contract. It also wants to force firms to state that they are regulated by the claims management regulator rather than by the MoJ, to avoid giving the impression that they are endorsed by the government.

Chris Lawrenson, the head of legal services at the Building Societies Association, said urgent action was needed to crack down on rogue firms. “The CMCs operating in the PPI sector are generating by far the most consumer complaints, 74 per cent according the Ministry of Justice,” he said. “Worse still, the vast majority of these complaints are made against just 15-20 firms out of the 1,000-plus authorised.”

Any bad companies should be dealt with, Agreed, but “urgent action was needed to crack down on rogue firms”, this sentence gives the reader the impression that the CMC companies are out of control.

According to the BSA, which they don’t mention.

Bogus claims filed : 22,441

Legitimate claims filed : 977,510

The “bogus complaints” are a drop in the ocean, compared to the upheld complaints. The total amount of complaints lodged with the FSA last year was 2,256,172.  PPI represented 42% of complaints …..???

Richard Lloyd at Which? said: “We want to see the Government do more to clean up the CMC industry. We want a ban on upfront fees and cold-calling, and for CMCs to be required to publish online all of their terms and conditions, fees and charges.”

Ian Barlow, a director of CMC firm Money Boomerang, hit back at the criticisms. “For thousands of customers, the claims management industry provides a valuable service by simplifying what can be a difficult process,” he said.

He admitted that rogue firms had given the sector a bad name. “The CMC industry, particularly in the PPI sector, has occasionally shot itself in the foot.”

Story Ends

All the articles would have the reader believe that there is a mass epidemic of “Rogue”, “Bogus Complaints” being made by  Claims management companies.

We have already established that there were 22,441 Bogus complaints made, lets be generous to the Banks and double this to 44,882, now round that up to a cool 50,000.

So lets say that there were 50,000 “rogue, bogus complaints” made last year.

Do you know how many complaints of being scammed were lodged with the Office of Fair Trading last year ?? This is from builders, roofing, guttering, wheelie bin cleaners, driveways, who charged for a not provided service.

3,200,000 !

So is there really some mass epidemic, or is this the Banks trying not to part with YOUR already stolen Money.

PPI Claims News

PPI Claims : FOS deals with 149% increase in PPI Complaints

The Financial Ombudsman Service has revealed that PPI Claims (payment protection insurance) increased dramatically over the past 6 months to September.

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PPI Complaints to Cost the Banks an extra £400m in fees to FOS

Banks in the UK are set to be charges an extra £400m in fees by the Financial Ombudsman service (FOS) for dealing with PPI complaints. The FOS charges a standard fee of £550,00 per complaint regardless of whether the complaint is upheld against the financial insitution or not.

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Claiming PPI in IVA, Getting the Facts Right

Whether you have completed your IVA or you are still in your IVA, making a mis-sold PPI claim is still possible. However, there are differences between the two situations. In one situation, you will be able to keep the compensation you receive from a successful claim. In the other situation, this simply is not possible.

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Understanding Credit Card PPI

• What Is PPI? PPI stands for Payment Protection Insurance. It is an insurance policy on your credit cards that will make payments for you in the event of unemployment, sickness or injury. These insurance policies have been widely mis-sold, and you may be entitled to a refund.

• What Does Mis-Sold Mean? Mis-sold is interpreted as being sold a policy from the credit issuing company under the guidelines that you to have the insurance to obtain credit, or you were not told that you could obtain this coverage elsewhere for a betterneeded price.

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Tim Capper reports on Financial Mis-Selling for Maple Leaf Financial. Our aim is to ensure you get honest advice and proper guidance to ensure a suitable recommendation can be made to pursue a financial claim

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Tim Capper

Bringing you financial news and information in plain english for Maple Leaf Financial. My aim is to help readers understand these often complex financial instruments.