Charter UK welcomes tough new measures that will put 'PPI claims pests' in their place.
New conduct rules to make sure claims management companies (CMCs) follow the rules – and pay for it when they don't – have been announced by the government.
The new laws, which take hold in late 2014, will mean large fines can be levied against CMCs who fail to toe the line, ensure that customers who get bad service can seek redress.
Firms will no longer be able to take fees before contracts are signed or offer cash gifts for profitable claims. Already a ban on referral fees paid to middlemen has led to almost 1,000 firms withdrawing from the market.
"These new rules will put PPI claims pests in their place. Cold call companies that bother the public will now have one less reason to do so. This will also help free up the banks to pay legitimate claims more quickly," commented Financial Secretary to the Treasury, Sajid Javid.
Additionally, the Claims Management Regulation (CMR) Unit at the Ministry of Justice is being expanded with more enforcement staff.
Paul Clark, CEO of Charter UK, believes the measures will create a more even playing field between CMCs and banks already adhering to a very stringent FCA code of practice regarding PPI.
"Rogue claims management companies (CMCs) are a thorn in the side of the financial services sector, as they are standing in the way of the consumers and banks who want to resolve outstanding PPI issues," he said.
"We have been campaigning for this legislation for many months, and this change could help the financial services sector and its customers put the PPI problem behind them once and for all."
Mr Clark said the most positive aspect of the new conduct rules is that they embed a best practice approach to treating customers fairly. "Those firms that use a systematic approach to capturing feedback from customers – and then use this information to continually improve their service and proposition – will be the clear winners in the market.
"Not only that, but these firms will also be able to demonstrate this best practice to the regulator very easily, as they will have this evidence readily to hand, in the form of detailed Management Information. A clear commitment to treating customers fairly has been demanded of the banks for years. At last, CMCs are now being judged by the same rulebook."