Claims firms 'get £12m PPI payouts'
Filed under: Scams & Fraud
A record 16,500 complaints about PPI mis-sold by firms that have since gone bust are set to be made in 2012/13, a rise from around 12,000 in the current year, the Financial Services Compensation Scheme (FSCS) said.
The consumer safety net, which is funded by levies imposed on the banks, is concerned that some £12 million of consumers' payouts in 2012/13 could end up going to claims management companies, despite people being just as likely to make a successful claim when they apply themselves.
More than three quarters of people have been using claims management companies to apply for compensation, which typically take 25% of the average payout of £4,534. If this trend continues, potential claimants could pay more than £12.6 million to these firms in 2012/13, taking into account around 10% of PPI claims which are rejected, the FSCS said.
Recent research by the FSCS, which pays compensation when companies are unable to, found that customers are just as likely as claims management firms to be successful in making an application to them.
Mark Neale, chief executive of the FSCS, said: "The significant uplift in PPI claims shows no sign of slowing down. The amount consumers pay to claims management companies for handling their case is sizeable.
"Claims management companies take a significant part of the possible pay-out and are no more likely to make a successful claim than consumers can on their own. People can save thousands by submitting their claims directly to the FSCS, rather than through a third party.
"While it may seem reassuring to have someone else do the paperwork, consumers should not be daunted by the process of making a claim. Claiming compensation from the FSCS is free and simple. If consumers have any concerns there is always someone on hand to help."
PPI complaints take up the biggest chunk of claims dealt with by the scheme, accounting for around 30% of the £237.8 million expected to be paid out in the next year.