PPI claims process is to be simplified

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					                           PPI claims process is to be simplified

                                                       Banks and credit card companies have
                                                      agreed to make the claims process for mis-
                                                      selling of payment protection insurance (PPI)
                                                      clearer and simpler.

                                                      People who believe they were mis-sold PPI
                                                      can apply for compensation by writing to
                                                      providers themselves.

                                                      But many have used claims management
                                                      companies who then take a cut of any
                                                      subsequent payout.

                                                      The agreement was made at a meeting with
                                                      Which? and Money Saving Expert on

A separate meeting will also be arranged with representatives of claims management companies.

Their trade body said that some cases were complex and experts were needed to ensure
claimants were not "short-changed".

The banks and credit card companies agreed to standardise complaints procedures across their

They also said that they would work together to explain to consumers why they do not need claims
management companies as well as calling for them to be more tightly regulated.


PPI was supposed to repay people's loans if their income dropped because they fell ill or lost their
jobs, but hundreds of thousands of people were mis-sold the policies. The bid for compensation
has become a lucrative business opportunity for an estimated 800 claims management
companies, who take a cut of 25% or more from the average £3,000 payout. These companies are
spending an estimated £2m a month on advertising, of which about £1.6m is on television

Richard Lloyd, executive director of Which?, said: "If people use claims management companies,
they could be stung twice.

"They are stung once when sold payment protection insurance, and they will be stung again if a
claims management company charges them a fee of 25% of more for doing something that they
can do themselves."

However, Anthony Sultan, from the Claims Standards Council - a trade body that represents some
claims management companies - said many cases proved complex so people needed help.

"We routinely find that banks do not pay the full amount of compensation to the consumer. They
short-changed them," he said. "Only by doing some fairly complex calculations can you work out
what the consumer is actually entitled to."

'Fully committed'

Banks paid out £1.9bn to the victims of mis-sold PPI last year, with many thousands of people
having successfully applied for compensation.

Among those who have received payouts by using a claims management company is Declan
Sharkey. He told the BBC that he received a call from a claims management company out of the

"I never expected to get any money back but I was given about £400. The claims company took
about 25% of my claim which left me with about £300," he said.

"At the time I was not aware that I could contact my bank myself to claim PPI refunds. I was led to
believe that the process was more complicated than that. Now I am annoyed that I had to give up
some of my own money."

Other BBC News website readers have explained how they received compensation from banks
with simple phone calls and letters.

Banks are now writing to millions of people who may have been mis-sold PPI, but have yet to
lodge a complaint, with another £5bn still expected to be paid out.

"Currently the vast majority of the complaints we receive about PPI come from claims
management companies, and over 22% of these complaints are on behalf of people who have
never even had PPI," said Brian Cole, managing director of Capital One, who is attending the

"We have always been fully committed to providing appropriate compensation to customers who
were wrongly sold PPI. However, the involvement of claims management companies means that
customers end up paying unnecessary fees to them when they could approach their bank or credit
card company directly and get the same outcome for free."

Find out more on how to claim for your PPI Claims below

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