Owed PPI cash? Beware claims firms
THOSE looking to claim back mis-sold payment protection insurance (PPI) policies don't need help from claims management firms.
That's the message of a new campaign launched by consumer group Which? today in response to the growing number of high-profile claims firms keen to take a slice of consumers' compensation cash.
The number of claims bought to the Financial Ombudsman Service (FOS) by private companies rather than individuals rose to 45% during 2010/11.
That figure was just 28% throughout the previous year.
PPI claim misses
The vast proportion of those cases bought by private firms rather than individuals - 76% - were about long controversial PPI.
After declining to appeal a High Court decision, the banks are set to pay out about £9bn to consumers in PPI redress and, if the current level of claim firm use continues, £2.37bn of that could go straight into the pockets of companies set up to take advantage of the scandal.
"We continue to tell consumers that we do not think they need the help of a commercial third party... we are a free service for consumers," the FOS' latest review said, one imagines somewhat plaintively.
"Anyone who thinks they may have been mis-sold PPI should complain directly to whoever sold it to them," said the consumer group's Chief Executive Peter Vicary-Smith.
The average PPI payout for a mis-sold policy is £2,750.
Assuming that the claims management firm took its usual 25% fee, consumers would pay out £825 of that straight to a claims firm.
"By going to a claims management company, you'll pay what could be a lot of money for something you can easily do yourself. If your bank rejects your complaint, always go to the Ombudsman - most complaints about PPI are upheld in favour of the consumer."
In addition, claims management firms have no fast track to the FOS: claims take the same amount of time.
Who's using claims management?
PPI claims management firm adverts, like the one below, imply that claims firms are the only way to reclaim money from financial providers.
According to the FOS, it's highly likely that the groups which are targeted by claims management companies may have less access to resources which tell them otherwise.
Those in the socioeconomic group DE (unskilled workers) are twice as likely to do so, for example.
However, it also seems that there is a money and time issue driving people to such firms.
35% of people applying to FOS between the ages of 25 and 54 do so through private claims management firms.
The youngest (under 25) and oldest groups (over 65) were far more likely to bring a claim themselves.
Since people in that middle age group are far more likely to have busy jobs and childcare commitments which constrain their time that constraint could be an added incentive for using such firms.
In addition, since people in this age bracket are generally among the wealthiest there could be a group which can simply afford to give away a proportion of their PPI claim to a firm in the belief that they're more likely to get the money in the first place.