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Vultures Entering Payment Protection Insurance PPI Claims Arena

by Jim ONeil on May 14, 2011

in ppi payment protection insurance

Customers of UK banks are now permitted to obtain restitution for mis-sold payment protection insurance (PPI). It is easy to file a claim so there is no need to pay someone for assistance. However, unscrupulous no-win, no-fee organizations and claims management services are contacting customers offering to help wipe out debts, for a charge.

Following the announcement that the large UK banks have scrapped their legal fight regarding mis-sold PPI, experts anticipate that activity from these entities will increase. PPI was intended as protection against defaulting on loans or credit cards if a borrower hit difficult financial times.

The past year has seen an almost doubling in the number of organizations that provide personal injury or PPI claims management.

The majority of these firms charge hundreds of pounds in upfront fees, simply for reviewing a case. They also may take as much as 30 percent of the money awarded to a consumer. One customer claims to have paid an upfront fee of £299 to one of these organizations for recouping PPI of £1,500.

To say he was surprised to learn that he also faced a charge of 25 percent of the amount recouped, plus VAT, is an understatement.

Claims management firms are responsible for over 80 percent of PPI claims. This has led the Ministry of Justice (MoJ), regulator of these entities, to investigate. Since 2007, the MoJ has closed down nearly 500 of these operations, including some that charged exorbitant fees or used misleading advertising.

In some cases, claims management firms are filing PPI claims without client knowledge. Rather than use a firm like this, consumers can file the claim themselves and seek a solicitor if expert guidance is needed. A consumer with home insurance might even have coverage for this legal expense, with the insurer paying legal costs from £50,000 to £100,000 directly to the solicitor.

BradlyFernandez

What is Payment Protection Insurance?

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