The vast majority of claims against lenders on
payment protection insurance mis-selling have been processed.
It is generally accepted that there are far too
many claims management companies in the UK and overseas, who are taking
consumers for a ride.
The Financial Services Authority does not regulate
these companies.
The regulator is a subsidiary of the Ministry of
Justice, the Claims Management Regulator (CMR). It regulates UK based ones but
has no power over overseas ones.
Knowing for many months that abuses still exist,
CMCs could have sought tougher powers or taken a tougher enforcement line.
Instead, all it can be bothered to do is what all
government department’s do when criticized for failing to do their job
properly-launch a consultation.
The consultation seeks to crack down on bad
practice by some CMCs.
Three proposed amendments:
- CMCs to only be allowed to agree contracts in
writing with their clients, before any fees can be taken.
- CMCs to be required to inform their clients of
any suspension or variation to the business' authorisation once in effect.
- CMCs to only be allowed to refer to their
regulatory status as being regulated by the claims management regulator -
rather than the MoJ that till now could be misconstrued as MoJ endorsement.
The regulator is aware that some consumers are
being left out of pocket when using a CMC to make a PPI refund claim. This
would be where the bank or institution uses the entire refund towards paying
off an existing loan, credit or overdraft the customer still has with the bank.
As many consumers expect a cash in hand payment this can lead to the consumer
needing to pay the fees from using a CMC from alternative means. The
consultation will consider whether a possible ban should be put in place on
CMCs charging customers who are in this position.
The real problem is not the rules, but that many
CMCs blatantly and knowingly break and ignore them; while overseas ones just openly
laugh at the CMR as it both denies knowledge of their activities and can do
nothing to protect the public against them.
Income protection insurance news: 25 August 2012
