Consumers slowly getting the message that they don’t need CMCs, says Financial Ombudsman

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By Legal Futures

23 May 2012


 

Insurance: significant number of complaints where no PPI ever existed

There has been a fall in the number of consumers using claims management companies (CMCs) to make complaints about payment protection insurance mis-selling, while some CMCs are “disappointingly lax” in the way they pursue their clients’ cases, the Financial Ombudsman Service (FOS) has reported.

FOS’s annual review, published yesterday, said that 60% of new cases (157,716) it received in the year to 31 March 2012 were about the sale of PPI, the highest number ever received in a year about a single financial product. In 2010/11 it was 104,597, which in turn was more than double that of the year before.

Some 69% of new cases were brought by CMCs, down from 76% in 2010/11, which FOS said “may reflect the fact that we have taken every opportunity this year to tell consumers that they do not need the help of a CMC”. Last week a row broke out over a call from consumer groups for tighter regulation of CMCs doing PPI work.

Just six CMCs accounted for 51% of cases, with the rest spread across more than 500 CMCs. FOS research found that men are marginally more likely to complain directly without using a CMC, while those aged between 25-54 are more likely than those younger or older to instruct a CMC.

FOS encourages the use of standard documentation for referring PPI disputes, but “we have again seen some CMCs taking a disappointingly lax approach to completing the questionnaire on behalf of consumers. Where a form is completed inaccurately – or not at all – we may not be able to progress the complaint.

“We have made our position on this very clear to the CMCs in question – and we have required a number of them to withdraw their complaints and to re-complete the questionnaire again in full. The quality of the information provided by CMCs to support their clients’ cases also continues to vary significantly.”

FOS added that it also receives a “significant number of cases” where, after investigation, it emerged that no PPI policy had ever been in place.

The annual review also showed a sharp increase in the number of complaints about legal expenses insurance, although at 805 (up from 635), it is a very small figure in the context of the overall number of complaints received by FOS.

 

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