Summary: This article explains what a claims management company (CMC) does in relation to PPI complaints, and whether or not they are actually needed in order to get compensation.
The mis-selling of payment protection insurance (PPI) policies to consumers has been increasingly publicised in the media over the last few years, with the Financial Services Authority claiming that since January 2013 the total compensation paid exceeds £8 billion. As such, many companies have seen the amount of money in the sector and some may say they have ‘jumped on the bandwagon’. It is believed that there are around 1100 claims management companies (CMCs) specialise in PPI, which is about 38% of all regulated CMCs in the UK.
What does a CMC do?
As their name suggests, a CMC will manage a claim for compensation on behalf of an individual. They usually charge a fee which can be up to 30% of the total value of the compensation reclaimed, in return for acting as the liaison between the PPI supplier and the consumer, allegedly making the task of getting compensation much easier.
Are CMCs regulated?
As of 23rd April 2007, all CMCs should be regulated by the Claims Management Services Regulator, which was designed to promote good practice and monitor standards within the industry. However, over recent years, one of the most complained about aspects of CMCs was the constant barrage of unsolicited texts, emails and phone calls. As these were conducted by companies working on behalf of CMCs, known as ‘lead generators’, it is difficult to establish who is actually responsible, however in the Ministry of Justice report The PPI Claims Market: Dealing with Malpractice published in February 2013 confirms that it is not acceptable practice and will penalise companies found to be marketing in this way. Suffice to say that if an individual is contacted by a company claiming to be able to help with PPI, they may be best ignoring it.
Do I have to use a CMC?
Reputable CMCs will be fully regulated and act professionally at all times, and some consumers may prefer to have a company act on their behalf, and pay for the privilege. However, an individual making their own PPI complaint is in fact very simple, and requires only sending a letter to the original company who sold the PPI. Templates of such letters can be found in abundance online, along with masses of further advice and information. Furthermore, by an individual making their own complaint, they will receive 100% of any compensation awarded.