MoJ praises claims management companies

The Ministry of Justice has recently published its third year assessment on the impact of regulation on the Claims Management industry.

The MoJ report makes clear that Claims Management Companies have encouraged people to make valid claims who would not otherwise have done so, particularly where PPI mis-selling is concerned.

The report gives credit to Claims Management Companies for much of the growth in PPI mis-selling complaints. In the year to 31 March 2010 a staggering 49,196 complaints about PPI mis-selling were made, with 74% of these coming from Claims Management Companies (CMCs) like Brunel Franklin.

The MoJ report highlights the fact that the Financial Ombudsman upheld PPI complaints in favour of the customer in an astonishing 94% of these cases. The Chief Ombudsman in his 2008/09 report said:

“One of the significant drivers of consumer complaints is the now substantially increased number and activity of claims management companies, encouraging disadvantaged consumers to complain.”
“It is also undeniable that the marketing activities of claims management companies have succeeded in identifying a very large number of consumers who have suffered loss. And this has resulted in many people being paid redress when they would otherwise have received nothing.”

Many customers who were sold PPI did not even realise they had bought it at all. The report highlights the significant impact claims companies such as Brunel Franklin have had in raising the awareness of PPI mis-selling.

The MoJ report goes on to make five general conclusions:
i. The market for financial refunds was created by regulatory action in respect of endowment mis-selling.
ii. As with personal injury, claims management companies have largely eliminated the inertia, search and hassle costs for potential claimants, at the expense of taking a proportion of their compensation.
iii. The activities of claims management companies have resulted in more people being able to claim legitimate refunds in respect of endowment mis-selling.
iv. The