Building societies vexed by bogus PPI claims
9 July 2012
Building societies have reported a steep increase in bogus payment protection insurance (PPI) claims.
According to the Building Societies Association, there were over 22,000 unfounded claims made in the six months preceding April. It said that this represented a 247% rise from the previous six months.
In these cases there was found to be no PPI to be claimed back, and it is believed that some unscrupulous claims management companies are to blame for misleading their customers.
The BSA has called for claims management companies to be more tightly regulated.
PPI, a product designed to cover people who miss repayments on loan and mortgages, etc due to ill health or unemployment, was widely mis-sold, and banks are still paying out colossal amounts of money in refunds.
However, the rise in bogus claims suggests that less reputable claims companies are taking an overzealous approach, inviting customers to reclaim with little or no evidence that PPI was ever sold to them.
BSA, who claims that its members are responsible for a very small proportion of mis-sold PPI policies, went as far as to say that claims companies should be made to pay a fee to the ombudsman if a false claim was submitted.
It first lodged a complaint in March but reports that the situation has worsened since.
Adrian Coles, director general of the FSA, said: "If anything, some claims management firms have stepped up their irresponsible, speculative scattergun approach to non-sale claims."
The Ministry of Justice, which is in charge of regulating claims management companies, said that bogus PPI claims were using "valuable time, money and resources" and warned that companies who put in a significant number of false claims would be investigated.