Consumer groups, the regulator, banks and credit card providers are to come together to cut claims management companies (CMCs) out of the payment protection insurance (PPI) compensation process.
The move is part of a partnership of Which? and MoneySavingExpert.com who aim to increase awareness of how easy it is for consumers to reclaim for mis-sold policies for free.
The partnership has made two commitments. The first is to call a PPI Summit on Monday 23 April which it claimed will be attended by all the major banks and credit card providers as well as the regulator.
The stated aim is to get all parties working together to help people get back the money that they're owed and help restore trust in the PPI claims process.
A separate meeting will be arranged with representatives of claims management companies (CMCs).
There will also be a radio advertising campaign to raise public awareness that consumers can easily reclaim mis-sold PPI for free.
With an average payout of £2,750, and CMCs, which have already made £1bn from handling such claims, taking a fee of 25% plus VAT as standard, consumers could pay £825 for something that they could easily have done themselves.
Ripping off
Which? executive director Richard Lloyd said: “It's encouraging that the banks are going to work with us to help put this situation right and help their consumers reclaim mis-sold PPI.
“We want to see real action to make it as easy as possible for people to reclaim their money. And we need the government to speed up regulation of claims management companies.
“It's a scandal that too many CMCs have been ripping off consumers, who don't realise that there are simple steps they can take to claim back their money themselves.
"We're saying to people today - don't get robbed twice.”
MoneySavingExpert.com's Martin Lewis said: “We're at crisis point now. There's over £5bn of PPI to be given out but, scarily, almost £2bn of that could end up in claims firms' coffers, rather than people's pockets and often all these firms do is send out similar template letters to the ones we give people for free.
“Worse still, the huge cash generated means their adverts are everywhere. That's why ... we are teaming up to get a simple message out: you don't need to pay to reclaim, you can do it yourself and keep all of your cash for free. In most cases, it's easy.”
