Citizens Advice calls for CMC cold-calling ban

Consumer advice charity Citizens Advice has said claims management companies (CMCs) should be banned from cold-calling.

The statement followed the results of Citizens Advice’s latest survey, contained in a report titled The claims pests, which found that three in five survey respondents were “pestered” by calls, emails and texts from CMCs within one week.

Citizens Advice claims its report exposes how CMCs “harass people in their homes in order to get a £2bn cut of PPI [payment protection insurance] compensation”. It based the £2bn figure on data from the Financial Ombudsman Service.

The report includes a poll of 300 consumers, an analysis of 288 client cases about problems with claims management companies and PPI, figures from the consumer helpline and details of financial losses from high fees.

The new figures found nine out of 10 surveyed had been contacted out of the blue by a CMC within the past 12 months. Seventy-two percent were about making a claim for PPI.

Citizens Advice said CMCs take around 25 per cent of a person’s successful PPI claim in charges. Data from Citizens Advice Bureaux (CAB) across the country found people were spending, on average, more than £1,100 in fees for something they could do themselves for free. One CAB even saw a client who paid more than £4,000 in charges.

The report said some CMCs were charging up-front costs of £600 – without being clear if the consumer would get any sort of payout. Citizens Advice is also calling for a ban on up-front fees as firms often fail to deliver on claims, making claimants worse off than before.

Citizens Advice said one in five CAB clients were led to believe they could make a claim for PPI without ever having a policy.

Citizens Advice chief executive Gillian Guy said: “People should give cold callers the cold shoulder and go direct to their bank if they want to make a claim for PPI. We’re advising them to ignore any unsolicited calls, texts, letters or emails from claims management companies.

“These firms are intimidating people in their home and wasting a lot of people’s time – and in some cases money when they make a claim and nothing comes of it. They’re not up front with their customers about fees, are charging excessive costs and aren’t getting people the payout they deserve.”

Guy said that banks can help stop their clients falling victim to CMCs by telling them more about mis-sold PPI and the compensation they are entitled to. But she added regulation also had a key role to play.

Guy said: “It is vital that the regulator introduces tougher measures to protect people from predatory claims firms. People were endlessly pestered about making a claim for an accident, now it is PPI and there will undoubtedly be another consumer crisis they try to exploit.”