No need to use PPI claims handlers

The banks’ defeat over the mis-selling of payment protection insurance could create a ‘feeding frenzy’ among claims handlers when most people can make a successful claim on their own.

The stark warning comes from the influential Financial Services Consumer Panel, which joined other leading consumer groups to urge victims of PPI mis-selling to steer clear of these controversial firms.

Claims handlers offer to pursue the complaints on a client’s behalf — often on a ‘no win, no fee’ basis.

They can pocket 20% to 40% of any redress and compensation. Some also demand an upfront fee of several hundred pounds.

However those who have been mis-sold PPI can reclaim it on their own, without needing to use a claims firm or hand over any of their cash.

The banks finally do the decent thing

Powerful lobby group the British Bankers’ Association announced on Monday it would not appeal against last month’s High Court ruling, which ordered its members to review past sales of PPI since 2005.

Tens of thousands of customers are in line to pocket an estimated £9 bn compensation. Payouts are expected to average £2,750.

Some 16.1m PPI policies have been sold since 2005 alongside credit cards and loans. They were supposed to cover repayments for customers who lost their jobs or became too ill to work.

But a widespread mis-selling scandal saw up to 6.4 m policies sold to people who didn’t want PPI, need it or would never have been able to make a claim.

However, while the banks’ defeat has been hailed as a major victory, consumer groups fear it could provide a huge windfall for claims handling firms.

No need to use claims handlers

An estimated half a million complaints have been picked up by claims handlers over the past year, says the Claims Standards Council, the trade body for the firms.

Its policy director Andrew Wigmore says: ‘Over the past few days we have seen a huge spike in activity from rogue firms, including text messaging and cold-calling.’

Despite their fees, these firms are no more successful than consumers who complain on their own.

James Falla, personal debt expert at beatmydebt.com advised people to make their own claim application thus saving money on fees.

“Of course some people just don’t want the hassle of making a claim themselves and will be happy to pay a handler a fee to do the work for them. However given the banks agreement to review all claims, most people will be able to make a claim themselves with minimal effort. It seems crazy for these people to pay out chunks of their compensation payout in fees especially when times are so tight” he said.

3,500 out of every 5,000 complaints disputes arbitrator the Financial Ombudsman Service receives a week are lodged via claims management firms. Emma Parker, from the Ombudsman, says: ‘There’s no need to use a claims management company — banks have clearly said they will deal with PPI claims where people should not have been sold it.

‘So we urge people who think they’ve been mis-sold PPI to get in touch with their bank and complain directly.’

However James Falla added that “People already using debt management solutions such as individual voluntary arrangements (IVAs) should get advice before making a claim. Any compensation awarded will be treated as a windfall and have to be paid back to creditors”.

Source: This is Money