Last week we reported Lady Justice Arden's fears about the "development of a claims industry… that increases the cost of obtaining financial advice". New figures released today by the Citizens Advice Bureau confirm her worst fears.
Now in a new report, 'The cost of redress', the Citizens Advice Bureau has revealed that CMCs have taken a staggering £5 billion of the PPI compensation received by complainants. This is over a quarter of the £18.4 billion of compensation paid to complainants and seems to suggest that a large proportion of complainants are relying on CMCs to make their claim, despite clear advice from the regulator and FOS not to do so.
It is staggering and upsetting that the Citizens Advice Bureau has found evidence that some – successful – complainants end up in debit to claims firms. The study also reveals the prolific use of cold calling even during family meals. As we observed last week complainants do not need to plead their cases to FOS but the Citizens Advice Bureau report reveals that 39% of people who used a claims firm were not aware that they could make a claim without a CMC. Almost half (47%) of people who had used a CMC said that if they had known about free materials to help them make a claim they would have decided not to use a CMC. The regulator and FOS must do more to make complainants aware that they do not and should not need to use CMCs
CMCs provide a worthless service and are deliberately taking 'money for nothing'. This is a mis-selling scandal that needs to be fixed immediately before more complainants lose out.