Claims Firms Face Shut-Out From CPP Scandal

Written By Unknown on Senin, 06 Mei 2013 | 11.46

By Mark Kleinman, City Editor

The claims management firms which have made millions of pounds from payment protection insurance mis-selling face being shut out from a new redress scheme being set up for customers of CPP, the stricken credit card insurer.

I have learnt that the Financial Conduct Authority (FCA), the new City watchdog, is trying to construct a compensation deal with the major high street banks that will stress the ability of affected consumers to obtain refunds directly.

The attempt to devise a scheme that bypasses claims management companies (CMCs) follows intense criticism of their role in the PPI scandal.

Millions of customers have been paid compensation by UK banks, which have been forced to set aside more than £12bn for one of the worst mis-selling scandals in the industry's history.

Hundreds of CMCs have been launched to act as intermediaries, arguing that they can help consumers win the appropriate compensation, despite the claims process being relatively straightforward.

The claims firms, frequently labelled as ambulance-chasers, can take 30% of any successful claim, earning the secretive backers of these businesses huge profits.

Households across the UK have been plagued by unsolicited phone calls and text messages promoting CMCs, even where those consumers have never held a PPI policy.

CPP founder Hamish Ogston CPP founder Hamish Obston

Banks such as Lloyds Banking Group have argued for robust action against the proliferation of CMCs on the basis that even fraudulent claims are costing them huge sums to process.

Although the likely bill for compensating CPP customers is likely to remain significantly below £1bn, people familiar with the talks between the banks which sold CPP products and the FCA say they are attempting to create a programme which will allay any need to use CMCs.

"The regulator is very aware of the issues surrounding CMCs and is sympathetic to the banks' argument that they should be cut out of processes such as the one that will ensure that CPP customers get proper redress," said a person close to the talks.

The discussions about compensating CPP customers remain fluid and may not be resolved for several months.

The credit card insurer and fraud protection provider has been forced to the brink of collapse, and recently agreed the sale of its North American business as part of a deal to secure a six-month stay of execution from its lenders.

Insiders said today that CPP was also likely to dispose of its other international operations although a decision about such a move will depend upon the fate of a takeover bid for the group by Hamish Ogston, its founder.


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1 komentar:

Unknown mengatakan...

FCA should surely make compensation deal with the banks. Thank you for sharing the insights.

Regards,
William Martin
Financial Claims Made Simple

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