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Ministry of Justice imposes Fee Cap on PPI Claims Companies
07 Dec 2017
Following the latest twist of the Financial Guidance and Claims Bill, a Government amendment was passed providing for a cap on fees charged by PPI Claims Companies.
The market, as it stands, includes many PPI claim companies claiming to be the cheapest, but offering fees in excess of 20% or even 25%.
Moneyback PPI is proud to be amongst the best ppi claims companies by offering a fee of 10%+VAT (12% in total), well below the proposed cap of 20% plus VAT.
The intention of the Government is to impose a cap ahead of the date the FCA is to take over regulation of claims management companies from the Ministry of Justice . The intention is for the cap to take effect within two months of the Bill receiving Royal Assent (currently this is estimated to be March 2019). Moneyback PPI welcomes this approach as it will help to ensure consumers are offered a more competitive service and also help to remove some of the less reputable PPI Claims companies.
Moneyback PPI recognises that there are some PPI claims companies in the market who seek to charge higher fees than may be necessary. The Claims Regulation Unit of the Ministry of Justice have also issued a Bulletin on the cap to Claims Management Companies, with additional guidance that states:
- “Fees must not be charged to a client prior to the conclusion of a PPI claim.
- Fees for any other financial products and services claims must not be charged prior to the provision of any regulated claims management services (excluding advertising for, or otherwise seeking out) to the client.
- A ban on any charges to a consumer where it is identified that the consumer does not have a relationship or relevant policy with the lender(s) for which a claim is submitted on their behalf.
- CMCs will be required to ensure all charges are reasonable and to provide consumers with an itemised bill setting out details reflecting the work undertaken and what the charges relate to where a contract is cancelled after the 14-day ‘cooling off’ period.”
The new rules are expected to come into force from 1 April 2018. All Claims Management Companies offering PPI claims services in England and Wales are required to adhere to these rules (as a condition of authorisation).
This will not affect Moneyback PPI as their fee is well below the cap and will continue to be so, but we know that many consumers still don’t shop around, or get “sold” a service which later changes. The Bill has yet to receive Royal Assent, and given the nature of the structure of Parliament and the current ongoing Brexit process, it may be that the Bill is delayed. However, given the messages coming from the Ministry of Justice, the intention is clear for this to take effect from April 2018.
Deciding who is the best PPI claims company is an important step for the consumer. This initiative by the government should help consumers not to get ripped off by companies that charge up front and extortionate fees.