Consumer groups Which? And moneysavingexpert.com have joined together in a campaign to educate consumers on how to claim money back owed to them from being mis-sold payment protection insurance (PPI).
The campaign aims to undermine the claims management companies who use TV advertising to persuade them to hand over the claims management process to them, often at a cost of up to a quarter of the money they would receive back.
They believe £5 billion of compensation has yet to be claimed and are urging those who believe they have been mis-sold PPI to use their resources to make the claim themselves.
The consumer groups believe that the average payout for a successful PPI claim is £2,750 and by managing the process themselves a claimant could save £825 including VAT that would otherwise have gone to a claims management company.
MoneySavingExpert.com's Martin Lewis said: "We're at crisis point now. There's over £5 billion of PPI to be given out but, scarily, almost £2bn of that could end up in claims firms' coffers, rather than people's pockets and often all these firms do is send out similar template letters to the ones we give people for free.”
Which? and moneysavingexpert.com are to hold a PPI summit with banks and credit card providers on Monday 23rd April with the aim to construct a plan on how to rebuild trust in the claims process.
The slogan to be used in radio adverts is: "Forget 'no win no fee'. Far better is no fee."
The Financial Services Compensation Scheme (FSCS) says customers are just as likely to make a successful claim as a claim management company.
Sarah Brooks, director of financial services at Consumer Focus said: “We’d urge any consumer thinking about turning to a claims company to look into making the claim themselves. They could potentially save themselves hundreds of pounds in the process.”
Many leading banks have indicated that they want to work with the consumer groups to address concerns.
Brian Cole, Managing Director of Capital One said: “We strongly welcome this initiative from Which? and MoneySavingExpert and look forward to sharing our views on how to address the threat posed by claims management firms at next week’s summit.”
Which? executive director Richard Lloyd, launching the campaign, said: "It's encouraging that the banks are going to work with us to help put this situation right and help their consumers reclaim mis-sold PPI.
"We want to see real action to make it as easy as possible for people to reclaim their money. And we need the Government to speed up regulation of claims management companies.
“We're saying to people today - don't get robbed twice."
MoneySavingExpert.com and Which? have free on-line resources to help people reclaim mis-sold PPI.Free ISA guide: Click here
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