CMCs should pay for fake PPI claims – Lloyds boss

Lloyds Banking Group chief executive Antonio Horta-Osorio has insisted claims management companies (CMCs) should share the cost of fake payment protection insurance (PPI) claims with banks, The Telegraph reported.

Banks have had to put aside billions of pounds to compensate customers who claim they were mis-sold the product. However, many of the claims may be spurious, and banks have blamed CMCs for inflating the claims burden.

Horta-Osorio has written to justice secretary Chris Grayling, asking him to look at changing the law on who covers the cost of processing claims, The Telegraph said.

Lloyds pays a handling fee of £850 per claim to the Financial Ombudsman Service for administering a claim.

In his letter, Horta-Osorio said he was willing to pay the fee for valid claims, but that CMCs should pay it for the fake ones.

Under the current system, banks pay the ombudsman’s fee irrespective of whether a claim is valid.