A quarter of claimants don’t know about PPI agency fees

A survey found 25 per cent of those interviewed admitted not knowing claims management companies (CMCs) charge, usually 25 per cent plus VAT.

Only half of the interviewees knew that using a CMC would be no more successful than making the claim themselves.

Thousands of CMCs have been set up since the courts ruled that lumping PPI into overall fees of loan, mortgage or credit card agreements was “mis-selling”.

The Ministry of Justice has shut down more than 700 firms in the past five years which processed claims, but allowed more than 3,000 other companies stay in business.

A campaign is launched today by the consumer group Which? and MoneySavingExpert.com, who jointly carried out the survey. The discovered just over a quarter of those asked said the main reason they would use a CMC, if making a future claim, is that they would not know how to make a claim themselves. Half who did use a CMC would be unlikely to use one again.

A PPI summit with the website, consumer group, major banks and credit card providers is also being held today, aiming to “restore trust” in the reclaiming process.

Which? executive director Richard Lloyd said: “This new research shows that many people don’t realise there are simple, easy to follow steps to reclaim their money for free and so they’re turning to claims management companies, too often unaware they charge a fee.

“It’s encouraging that the banks are going to work with us to help put this situation right.

“It needs to be as easy as possible for people to get back their money. Many have told us that free online claims forms, letter templates and helplines would help them to make a claim, so we want to see action.”

An estimate by Which? last year calculated that consumers could lose out on more than £2 billion in PPI redress by using CMCs. Average payouts are £2,750, said the group, and with CMCs taking 25 per cent plus VAT, consumers could be paying £825 for something they could do themselves.

MoneySavingExpert.com’s Martin Lewis said: “Sadly PPI has become a cash bonanza for unscrupulous claims companies, who through a series of lies and misdirection are persuading people they are the only option for getting their PPI money back.”