The United Kingdom’s Ministry of Justice announced yesterday it is set to limit the fees charged by PPI Claims Management companies to their customers with many reportedly charging over a third of their customers financial claims for their own profits.
Determined Government Ministers intend to crack down on the PPI industry by capping the fees they can charge under new proposals announced late yesterday. The percentage paid out on compensation awards is set to be 15% which will be capped at £300 which will send shock waves through the seemingly lucrative PPI industry.
“We want to do all we can to get consumers a fairer deal” were the words from Justice Minister Lord Faulks “Some claims management companies charge as much as 40% of the compensation awarded for very little work”
He continued “This has to stop and his government is taking action to make sure people aren’t being taken advantage of by these greedy practices”
The Ministry of Justice stated an estimated 3.5bn in fees have been charged from PPI Companies since the year of 2011 and also mentioned the aggressive marketing practices that many PPI firms use that fuels speculative claims say some consumer groups, banks and insurers.
Head of Claims management regulator, Kevin Rousell commented that the new proposals will “ensure the industry provides a better deal for those consumers and operates to more professional standards”
George Osbourne, Chancellor for the government first indicated future plans for more regulation of the PPI industry last summer as part of his budget speech. The government has already taken a tough stance against immoral practices by some PPI firms by issuing fines and revoking the licences of over 1,000 claims management companies since 2010.
Discussions and consultations are set to begin today and it is expected they will continue for a 8 week period with the new proposed measures introduced shortly after.
A large number of PPI companies are said to be owed six figure sums by customers they have sought compensation for so will need to act quickly or face the potential of wiping off massive chunks of their bad debt ledger with immediate effect thereof.
The PPI Industry has also been a source of work for the Debt Collection Industry with many PPI firms using DCA’s to recover commissions due to them. PPI Debt Collection specialists Frontline Collections advised CMC’s will need to act quickly or potentially face ‘significant loss of potential revenue’.