The letter from Peter Vicary-Smith, chief executive of Which?, Angela Knight, chief executive of the British Bankers’ Association and Martin Lewis, founder of MoneySavingExpert.com follows a PPI summit held last month.

The summit aimed to discuss how to improve the compensation scheme for those mis-sold payment protection insurance.

Following research by the groups, it found only half of respondents knew using a CMC was no more successful than doing it themselves and only a quarter knew CMC companies took a fee.

The groups then wrote to Secretary of State Kenneth Clarke MP to urge him to better regulate and supervise claims management companies.

The letter reads: “We agreed that more needs to be done to help those who have been mis-sold PPI and together have committed to further action.

“However, we also believe the Government has a critical role to play, to help consumers and the industry, by ensuring third party complaint handlers are properly regulated and bad practice is stamped out.

“Misleading advice, unfair contract terms and a lack or transparency about fees are all too common and there is very little consumers can do to gain redress when they occur.”

The group said any action would need to be taken urgently as the bulk of the money set aside for PPI redress would be paid out over the next year.