The Public Accounts Committee has today published a report on 'Financial Services mis-selling: regulation and redress', which once again is critical of the role of Claims Management Companies in the Payment Protection Insurance scandal.

Commenting on the report on behalf of the Alliance of Claims Companies, Simon Evans said:

 

“It is disappointing that the Public Accounts Committee’s Report, in its very first recommendation, has made a fundamental misunderstanding of the process for reclaiming mis-sold Payment Protection Insurance. 

“Indeed, they mention that it is straightforward and free to claim compensation through the Ombudsman, however consumers must first make their complaint directly to the company that sold them the PPI – not directly to the Ombudsman in the first instance. If the committee has failed to understand the process, it is little wonder therefore that consumers also have difficulty in reclaiming the money that is rightfully owed to them.

“But the process itself isn’t always straightforward and simple, indeed the National Audit Office report published in February acknowledged that ‘banks’ handling of complaints has been poor’ and that ‘inadequate complaint handling by financial services firms has been a factor in many cases.. going to the Ombudsman for adjudication.’

“What is also clear is that the amount of cases upheld by the Ombudsman remains disturbingly high. Overall, in the second half of 2015, 69% of cases referred to the Financial Ombudsman were resolved in favour of the consumer – let’s be clear about this, in 69% of cases, where financial institutions said they had not mis-sold and would not compensate the customer, they were wrong, and were made to repay the money they took from consumers across the UK. Bear in mind also, that 80% of PPI complaints to the Ombudsman come via CMCs.

“Even more alarmingly, in the case of some high street banks such as Clydesdale and Lloyds Bank the overturn rate in favour of consumers is over 90% in relation to PPI claims. This is simply not acceptable, and is nothing more than a continuation of the culture of deceit that led to the mis-sale in the first place and further puts consumers across the UK in detriment.

“Claims Management Companies, including those who are our members in the ACC, continue to challenge the banks over these continuing bad practices, and reclaim millions of pounds for consumers up and down the country, consumers who may well not be financially literate enough to claim for themselves.

“The real scandal here is the scale of the mis-selling, and the continued resistance of banks and others to properly compensate consumers in a timely fashion. Claims management companies have an important role to play in bringing financial institutions to account for their malpractice, and will continue to do so.

“Perhaps I should finish on the following statement from the National Audit Office report ‘Although complaining directly to the Ombudsman is straightforward and free, many consumers who have been mis-sold financial products fail to receive full compensation, because of lack of awareness… Lack of awareness can mean that consumers do not know that they were mis-sold a product, or that redress is available. The Ombudsman has found that many consumers don’t pursue a complaint because they believe that it wouldn’t achieve anything, or that it would be too stressful.’ That is the real issue here along with the fact that banks and other financial institutions ripped off consumers for many billions of pounds, and that is what Politicians and others should be addressing much more thoroughly.”