Oral question asked in the House of Lords, by Baroness Sherlock (Labour). It was answered on Monday, 5 March 2012.

Insurance: Payment Protection Insurance

Question: My Lords, I declare an interest as a director of the Financial Ombudsman Service. My best guess is that the banks have provisioned about £9 billion for PPI. If about 80 per cent of cases going to the ombudsman come through claims management companies, then at least £2 billion is going to CMCs rather than going back to customers. Given that, will the Minister give the House an undertaking that his department will act to require CMCs to declare their fees up front and to tell customers that they are not required to use them as they could make a claim themselves for free?

Answer: My Lords, those are exactly the regulations that pertain to these companies. However, because of the pressure of sales, there is no doubt that people are being misled in that way. We shall need to take further action because, as the noble Baroness rightly says, one does not need a pocket calculator to realise that these companies operate in an area where they can make a lot of money, which should quite properly go into consumers' pockets.

Secondary information

Type: Oral question
Reference: 735 c1550
Session: 2010-12
Oral question type: Supplementary
Chamber / Committee: House of Lords chamber
Subjects: Compensation Consumers Credit Insurance Misrepresentation Claims management services
Link: View this Oral question on www.publications.parliament.uk