Claims companies dominate PPI claims to FSCS - Money - News |

News News brings you the latest financial & economic news & reviews of the best products in the UK by our team of money experts.

Claims companies dominate PPI claims to FSCS

Claims companies dominate PPI claims to FSCS

Category: Money

Updated: 31/08/2017
First Published: 30/01/2012

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The vast majority of claims made for mis-selling of payment protection insurance (PPI) are being made by claims management companies.

The firms make claims for people who think they may be due compensation, but they take a cut of the money for doing so.

Many of the companies advertise on television and send text messages to people outing their services.

However, the Financial Services Compensation Scheme (FSCS) has told people thinking about filing a claim that going through a third party does not significantly improve their chances of redress.

Analysis shows the number of successful claims made by individuals is almost the same as for those made by third parties.

The uphold rate for claims made through third parties is just under 87%, compared with just over 83% for individuals.

More than three quarters of PPI claims to the FSCS have been made through claims management companies.

The FSCS said that although the number of claims submitted directly had more than doubled from 2010 to 2011, the number coming from claims management companies far outstrips the number of individual claims in both years by more than three to one.

With such firms taking a cut of the compensation, which can be up to 25% or more, and the average pay-out to those going via a claims management company being £4,534, the firms receive on average £1,133 per claim.

"Consumers should be aware claiming compensation from the FSCS is free and the process is not difficult. In these tough times people may well think they increase their chances of getting their money back but that is not necessarily the case," said Mark Neale, chief executive of the FSCS.

"Each application is judged on its individual merits. Whether it is submitted by a claims management company or by an individual has no bearing on the likelihood of success.

"If people make the claim directly and it is successful, they receive the full payment, without having to share a big cut with a third party."

Find the best financial information for you - Compare Financial Solutions

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.