News : PPI Claim Scam?
Many customers mis-sold payment protection insurance (PPI) are losing out twice by using claims management companies (CMCs) to get compensation.
The banks paid out £1.9 billion last year to consumers who were mis-sold the insurance, putting the average successful claim at £2,000.
While it's free to contact your bank to apply for compensation, many people have used claims firms to do so. These companies then take a cut of around 25% of any compensation awarded.
One in four Britons said they didn't know CMCs charged a fee for the services provided, according to research.
Almost all those questioned said they had been contacted by a CMC in the first instance – 55% had received text messages and 54% had been contacted by post.
PPI is taken out to cover repayments of loans should you fall ill or find yourself out of work but thousands of ineligible policies were mis-sold.
On 23 April there was a PPI Summit, run by Which? and www.moneysavingexpert.com, attended by all the major banks, credit card providers and regulators to try to speed up the process of getting claims paid and show customers how easy it is to reclaim PPI on their own.
'This new research shows that many people don't realise there are simple, easy to follow steps to reclaim their money for free and so they're turning to claims management companies, too often unaware they charge a fee,' says Richard Lloyd, executive director for Which?.
'It's encouraging that the banks are going to work with us to help put this situation right and help their consumers reclaim mis-sold PPI. It needs to be as easy as possible for people to get back their money. Many people have told us that free online claims forms, letter templates and helplines would help them to make a claim themselves, so we want to see action,' he adds.