Direct PPI claims 'as successful'
The Financial Services Compensation Scheme (FSCS), which pays out compensation when a company which has mis-sold PPI has gone under, said more than three-quarters of consumers are making claims to it through specialist companies, which typically take a 25% cut. While around 87% of claims made through third parties are upheld, this compares with 83% made by individuals, the FSCS said.
The average payout for PPI claims made by claims management companies to the FSCS is £4,534, with the companies then typically shaving off more than £1,000 of this total. Meanwhile, the typical payout to someone making a claim directly is nearly £2,000 higher, at £6,398.
The body has seen a recent surge in PPI claims, with 60% more claims being made in 2011 than in 2010. It said consumers can make claims themselves for free by filling in a form.
Between 2008 and 2011, 16,387 PPI-related claims were submitted to the FSCS by claims management companies, of which 12,269 were upheld and £55.6 million was paid out in compensation. During the same period, 5,188 claims were made by individuals, of which 3,419 claims were upheld and £21.9 million was paid in compensation.
The FSCS pays out claims when a firm is unable to. For claims relating to the selling or arranging of general insurance, including PPI, the FSCS will compensate 90% of the value of the claim, with no upper limit.
Consumers took out PPI to help repay their loans if they fell ill for a long period or became unemployed, but a widespread mis-selling scandal emerged. Some customers found they had taken out the policy without realising they did not have to have it, or felt pressured into doing so.
The British Bankers' Association confirmed in May 2011 that it was not going to appeal against a High Court ruling that rules relating to the mis-selling of PPI could be applied retrospectively. The move meant more than three million people were in line for compensation, expected to result in an overall bill of up to £9 billion.
For more information about making a claim, visit www.fscs.org.uk or call the FSCS on 020 7741 4100.
© 2012 Press Association