BSA demands tougher clampdown on claims management firms
Tuesday 10th July 2012
Claims management firms that have been inundating lenders with bogus PPI claims have been labelled the modern day equivalent of ‘highwaymen’.
The Building Societies Association is now calling for the Ministry of Justice to be given more powers to regulate the companies, as claims to mutual lenders continue to rise.
They soared by 247% in the six months to the end of April compared with the previous six months – despite, says the BSA, mutuals having been a very minor player in the PPI scandal.
The Ministry of Justice, which regulates claims management companies, has told them that they must make basic checks to see that PPI was actually sold before a claim is lodged, but the BSA said it has no confidence that rogue firms will comply.
Adrian Coles, director-general of the BSA, said: “Looked at from the perspective of our highly regulated sector, some claims management companies look remarkably like the modern day equivalent of highwaymen.
“The Ministry of Justice warning in August 2011 was clearly ignored.
“If anything, some claims management firms have stepped up their irresponsible, speculative scattergun approach to non-sale claims.
“It is clear that the Ministry of Justice simply does not have the powers that it needs to effectively control the rogue elements in this industry. They do not even have the power to fine.”
Meanwhile, Hinckley & Rugby Building Society said that only one in 32 PPI complaints received within the last three months was from someone who actually had a policy with the society.
Chief executive Chris White said people were simply trying their luck in the hope that building societies or banks might be tempted to pay up without investigating.
He said: “The problem with these bogus complaints is that it is our duty to investigate each one within the FSA rules as though it was genuine. That is a burden on the society in terms of time, cost and staff resource.”
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