PPI: Building Societies “bombarded” by fake claims

Posted on July 10th, 2012 | Categories - News

New figures show just how many people are making bogus PPI claims.

The Building Societies Association (BSA) say that their eight largest members received 22,441 fake claims in the six months to the end of April this year. Shockingly these were cases where the claimant never even bought PPI from the building society they were claiming from.

The BSA figures echo those from the Financial Ombudsman who said that 6,000 people submitted false PPI claims in 2011. If the BSA statistics are correct it seems as though the problem is getting worse, wasting valuable time and manpower at the building societies affected.

Lloyds TSB have also said previously that up to one in four claims they receive is from someone who never had a PPI policy with the bank.

PPI compensation

PPI, or Payment Protection Insurance, was sold to many people who took out personal loans, credit cards and mortgages over the past decade, but in many instances people who took out policies would never have been able to claim.

Banks and building societies are in the process of paying out around £9 billion in compensation to people mis-sold PPI, However huge numbers of claims management companies had sprung up to ‘help’ people claim and it seems, submit bogus claims where PPI was never bought in the first place.

Fake PPI claims

The figures have led the BSA to call for claims management companies, who are behind many of these fake claims, to be better regulated. The BSA also believes that claims management companies should have to pay a fee if a claim turns out to be bogus or fake.

Responding to the research FSA Director General, Adrian Coles, said: “If anything, some claims management firms have stepped up their irresponsible, speculative scattergun approach to non-sale claims.”

Coles continued: “Much stronger action is needed if these companies are to stop misleading consumers and putting a pointless and growing administrative burden on BSA members and the Financial Ombudsman Service.”

“Looked at from the perspective of our highly-regulated sector, some claims management companies look remarkably like the modern day equivalent of highwaymen.”

Expensive claims management companies

Claims management companies take around 25% of any compensation received as their fee, the industry is lucrative for them hence the increase in the number of fake, or bogus, claims.

However, financial experts, including the high profile Martin Lewis of Moneysavingexpert, believe that genuine claims can be made by people themselves and that claims management companies should be avoided because of their charges.

Lewis has previously got together which consumer champion Which? to warn about the expensive fees charged by claims management companies and to show consumers that they can do it themselves, read the full story here .