Charges for claims over £2,000 will be limited to £300 under plans
The Ministry of Justice (MoJ) has proposed capping fees for claims management companies (CMCs) seeking compensation for mis-sold financial products.
Under the proposals, maximum completion fees would be capped at 15% of the final compensation for bulk claims, such as for mis-sold payment protection insurance (PPI). Completion fees for other types of claims would be capped at 25%.
Overall charges for claims worth more than £2,000 would be limited to £300.
The MoJ also proposes a ban on CMCs receiving or making any financial payment for referring or introducing a consumer to a third party in relation to a PPI or packaged bank account claim, a ban on any fees where no relationship is found between a consumer and a lender, and a ban on all upfront fees for all financial claims, where CMCs ask to be paid before any work is carried out.
The proposals would also introduce a maximum cancellation fee of £300 for bulk claims when a consumer cancels their contract with a CMC after the initial 14 day ‘cooling off’ period.
Chancellor George Osborne announced a “major review” of CMCs and his intention to cap their fees in 2015’s Summer Budget.
The consultation on the fee cap proposals, launched today, will run until 11 April.