The Ministry of Justice MOJ) has today launched an investigation into PPI Claims Companies following a deluge of invalid PPI compensation claims filed on behalf of borrowers who were allegedly mis sold payment protection insurance (PPI).
The MOJ, which regulates claims management companies, has apparently received a large number of complaints from banks over the large number of complaints, form PPI Claims Companies, where there was no PPI on the policy.
Latest figures show that UK banks are now rejecting up to half of all ppi claims relating to mis-sold PPI after a substantial increase in the number of complaints submitted in the past few weeks.
Up to 80% of these come through claims management companies, who are actively encouraging borrowers to claim back PPI with advertisements, emails and text messages as part of their marketing strategies.
One bank cheif is quoted as saying “It’s delaying things horribly… The sheer volume of submissions is distracting us from the process of paying out on valid claims.”
The PPI scandal first came to light several years ago, but the banks only really started paying the process of paying mass compensation last May after they gave up a legal fight against the FOS in their Judicial Review.
Rejection Rates from the big 4 UK Banks are s follows:
- Santander 40%
- Barclays 40-50%
- HSBC 33%
- Lloyds 33%
- RBS 20%
The banks are calling for changes to the way claims management companies are regulated, and although these figures may seem alarming… lets not forget that 75% of PPI complaints rejected by the banks are infact being upheld by the Financial Ombudsman Services (FOS) – which raises questions about the figures being released by the banks and their reasons for doing so.
Let’s be absolutely honest here… there are a number of “scammers” out there posing as claims management companies that should have their licenses revoked (we will be reviewing some on Financial Reform over the coming weeks… so watch this space). But the fact that 80% of borrowers are using the services of PPI claims companies to pursue their PPI reclaim suggests that the majority are doing a fantastic job and that without them, the banks would have got away with not having to repay the money they scammed from their customers in the first place.
The banks don’t want to pay the money back. They purposefully reject a large number of claims to divert the pressure on the FOS who are already over stretched. They fought tooth and nail to avoid having to repay the money after admitting they’d mis sold PPI, and are now using whatever delaying tactics they can to minimise their losses
The regulators – the MOJ, the FSA, the FOS and the FSCS are unfortunately treating the banks with kid gloves and focusing their attentions on claims management companies rather than working on creating a process to streamline the claims process. There are still thousands of claims, which were placed on hold during the judicial review, that have yet to be settled. It’s a bloody joke!