Ombudsman slams CMCs
Originally posted by 5corpio

Consumers are facing increased detriment from claims management companies (CMCs) seeking to exploit the fallout of the High Court ruling on Payment Protection Insurance (PPI), the chief executive of the Financial Ombudsman has warned.

Natalie Ceeney said CMCs could pocket up to £2bn in fees from confronting banks on behalf of customers seeking redress for PPI mis-selling, which banks have agreed to pay after the High Court ruled in favour of a challenge bought against them over PPI by the Financial Services Authority (FSA).

Ceeney said the banks had only themselves to blame for the rise in CMCs, that had demonstrated "appalling behaviour", which was not in the interest of consumers.

"We see some appalling practice from CMCs. These companies are massively under-regulated and PPI is going to lead to a massive expansion of that market,"

she said.

"We have a shared view of the problem. We see CMCs do things that if they were a bank, they would have been struck off a long time ago."

The claims management regulator, the Ministry of Justice (MoJ), is currently conducting a review of claims management regulations in order to establish whether a different approach to CMC regulation is required.

In an acknowledgement of the issue, the British Bankers’ Association (BBA) is hosting a conference called Dealing with CMCs on 19 July in London.

(Source: Credit Today online )