Wednesday, 06 February 2013 10:53
Claims management companies strike lucky on PPI claims
Over half of the £136m in payments to those mis-sold payment protection insurance are to consumers who have used a claims management companies (CMCs).
The Financial Services Compensation Scheme has paid out £136m to consumers for PPI claims so far and over £89m of this involved CMCs.
During 2012, 19,000 consumers submitted claims to the FSCS and 59 per cent of these came from CMCs. However, the figure is down from 2011 when 76 per cent of claims were made by CMCs.
CMCs typically take a cut of about 25 per cent of compensation meaning consumers handed over more than £7.4m to companies. Since 2008, over £22m in compensation has been paid to CMCs.
CMCs were also not necessarily a guarantee of a higher payout either as the average payout was £3,837, with £960 of this being given to the CMC. Consumers who made their own claim directly to the FSCS received a payout of £4,895.
Mark Neale, chief executive of the FSCS, said: "Claims management companies take a sizeable chunk of any pay-out. "Consumers who make a claim directly to FSCS keep every penny of their compensation. Some people may prefer to use a claims management company but it is important that they understand the charges from the outset and are happy to pay them."