PPI 'ambulance chasers' rapped by compensation scheme

Tuesday 31st January 2012

Most claims for mis-sold payment protection insurance are being made through 'ambulance chasing' claims management companies.

This is despite the fact that claims management companies have an only marginally higher rate of success than those being made by individuals – and clients have to pay them 25% of their compensation award.

Between 2008 and 2011, more than three-quarters of PPI claims were made through companies, with an 87% success rate, compared with an 83% success rate for consumers handling their own claims.

With an average payout of £4,534, a 25% cut to a claims company would be just above £1,100.

Mark Neale, chief executive of the FSCS, said: “Claims management companies take a sizeable part of the possible pay-out and are no more likely to make a successful claim than consumers can on their own.

“Each application is judged on its individual merits. Whether it is submitted by a claims management company or by an individual has no bearing on the likelihood of success.

“If people make the claim directly and it is successful, they receive the full payment without having to share a big cut with a third party.”

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Added by Lorraine on 2012-01-31 17:33:46

It's a frustration that exists in all industries sadly. The MoJ must be unable to cope with the number of firms out there which was predicted some years ago when the licences were handed out like sweets. They are now more stringent, but it's too little too late.

I'm glad I have gone some way to convince you that there are some good firms out there. Unfortunately, it's usually the underdogs that remain just that. It is frustrating that due to us following the regulations to the absolute letter that we have no doubt lost a lot of business to firms that tell clients what they want to hear. However, it's all about the bigger picture and hopefully the MoJ will catch up with the 'unscrupulous ones' some day.

In the meantime, I can sleep at night.

Added by Marky B on 2012-01-31 16:06:40

Lorraine - I am really pleased to hear that you are reputable and I note the work that you do and this is a credit to you. However, in all the cases I have been involved with the pattern has been the same as I mentioned in my earlier feedback. Given the number of cases I have seen and heard about I am left with the inevitable conclusion that your firm is the rarity. That might be a good thing for you but won't be until those that deserve the accolade of ambulance chaser are eradicated.

I would agree that the forum for the debate is with the MOJ if only they would reply to complaints about licence holders..

Added by Lorraine on 2012-01-31 12:48:25

Marky B - clearly your own experience was a bad one. But it is not right to assign your experience of one firm against all CMCs.

If we do not believe there is a good chance of success, we close the file down. We do not throw it in and hope for the best. Where the client is complaining against an IFA or similar, we make additional enquiries to ensure that PPI was sold in the first place and that the policy was mis-sold. In most cases, it isn't and we refuse to pursue the case.

We go through all our client paperwork with a fine tooth comb and if there are any discrepancies or contradictory information, we refer back to the client. If the information is not improved upon, we cease work on the case.

As a firm we do not fish for cases - we do not purchase leads, cold-call potential clients or advertise save for having a website. Approximately 90% of our business comes to us via agents who are mostly financial advisers who have identified clients that have PPI and were not aware, or have PPI and were mis-sold it by a high street lender.

Sadly, in all areas of business and industry there are those that do not play by the rules. However, your grievances should be directed to the regulatory bodies rather than the whole industry as it isn't all as bad as you make out.

Added by Marky B on 2012-01-31 12:07:11

I am sorry that the term ambulance chasers does not suit - perhaps the term barratry might be better, though it is the same thing - ambulance chaser is the prejorative term for barratry.

As consultant to the odd firm that gets fishing letters from purveyors of barratry let me recant my recent experiences.

Of the four recently handled, three companies alleged, inter alia, that a policy had definitely been sold, alleged negligence, wrong practice and misrepresentation. In all these cases there was a waiver in each file, signed by the customers, in which they confirmed that they had not taken cover at all. No policy had ever been sold and so the claims were a try on or an attempt to obtain money by deception.

In the other case, the CMC was not alleging any wrong at all but rather was using a subject access request under the DPA to get hold of the file to find out whether a claim could be made - champerty in no other words.

To me all these practices are repugnant. Firstly, it is a basic tenet of law, if not common decency (some will remember the word), to establish some facts before making allegations - like getting a copy of a policy for example. Secondly, the use of the DPA to obtain a file to go fishing is, in my view, an abuse of the law. Had the CMC been charging a fee for an audit of the file that would be one thing, but the only way it could make brass was to find something wrong with the file and the only way the customer would pursue the potential claim was to pay nothing to find out. The reasons for all this ought to be obvious because the whole ethos is based on no win no fee. Therefore, customers can be 'encouraged' to make claims because they have no risk and this in turn encourages CMCs to be less concerned about obtaining any evidence at all. We have all had the calls from call management centres suggesting that compensation for mis-selling is but a call away. I always hang on the line and give the caller both barrels.

Whilst these jackals have been easy to fend off, what the customer must realise is that extra resources to deal with the administration of false claims costs money and these costs have to be passed on to the majority of people who do not want a free lunch. It is the same principle with us all paying more for car insurance because of uninsured drivers and whiplash claimants. It's really socialism in another set of clothes. Those who feel improverished can not pay insurance or make spurious claims which is a cost ultimately levied on the majority of consumers who can remember what they signed and can accept responisbility for their own actions. We are all paying for these hapless 'victims'.

Now, before the howls of protest, let me say that there probably are genuine claimants which is why there is an FOS. There are possibly geuine CMC's but they are not necessary. To be fair, one chap from a CMC, when faced with the inevitable TRUTH (that old fashioned word) of evidence, did have the decency to apologise. As for the others, they have simply ignored letters and sent reminders to reply to the initial fishing letter they have sent.

So, based on my own experiences, I can say that, in my opinion, CMCs are unprofessional, incompetent ambulance chasing, grave watching vultureswho have licences supplied by the Ministry of 'Justice' who themselves do not respond to complaints made about firms that create additional work and costs for innocent firms. The simple fact is, on my experience, the CMCs are only interested in extracting money and not in gathering any evidence or even asking for it. In fact, in making false accusations in my view both they and their 'clients' are seeking to obtain a pecuniary advantage by deception.

In my view, the best way to deal with the neoplasm that is the CMC is to cut off its potential blood supply by making it difficult for them to make money.

Put another way, the FOS exists for consumers to make proper and valid complaints without charge. In the CMC we have another sub industry that can only survive by the encouragement of claims even where there is no claim.

Accordingly, the term ambulance chaser is rather too good for them. But hey, let;s not let the truth get in the way of a good story.

Added by MarkG on 2012-01-31 11:14:26

I think it's easier for people to lie and exaggerate via a third party as well.

These claims should be given a higher level of suspicion for that reason.

Also since claims companies are in the finance industry they should pay the FOS fees if the claim is unsuccessful and not be able to pass this off onto the client.

Added by Lorraine on 2012-01-31 10:02:39

I'd have thought that as the FSCS are reverting back to the 'ambulance chasing' CMC in most cases these days to request information that they have been unable to obtain, that they were happy of the support.

I resent the term 'ambulance chasing' - it does not apply to all CMCs and is a term coined for firms that chased personal injury claims - not mis-sold PPI.

I spoke to a lady only a few days ago who called for advice about claiming PPI. She was informed that she could do the complaint herself, which was news to her, and came off the phone thanking me for the help and she is likely to try it herself. There are some clients however who say "No, I want you to do this for me".

Why is no one doing an expose on the banks and how even now there are cases that have not been investigated that were submitted before the judicial review and that some clients are still waiting over 6 months later that their complaint was upheld for their redress?

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