CAP on CMCs -Cutting costs for consumers in financial claims – Consultations – GOV.UK

[Legal Beagles]

This consultation seeks views and further evidence in relation to proposals to: cap the maximum completion fee to 15% (including VAT) for bulk claims (such as mis-sold payment protection insurance claims) with a single lender and cap the overall charge for claims worth more than £2,000 in total to £300…
Read More -> Cutting costs for consumers in financial claims – Consultations – GOV.UK

Proposals
We are seeking views and further evidence in relation to our proposals to;


- Cap the maximum completion fee to 15% (Inc. VAT) for bulk claims (such as mis-sold payment protection insurance claims) with a single lender and cap the overall charge for claims worth more than £2,000 in total to £300.


- Introduce a maximum ‘cancellation’ fee of £300 for bulk claims when a consumer cancels their contract with a claims management company after the initial 14 day ‘cooling off’ period.



- Ban CMCs from receiving or making any financial payment for referring or introducing a consumer to a third party in relation to a PPI or PBA claim



- Ban any fees where no relationship is found between a consumer and a lender.



- Ban all upfront fees for all financial claims, where CMCs ask to be paid before any work is carried out.



- Cap the maximum completion fee to 25% (Inc. VAT) of the final amount of compensation awarded in all other types of financial case.



The proposed changes would be implemented via changes to the Conduct of Authorised Persons Rules 2014.

Give Us Your Views

Online Survey
Related Documents

• Consultation document, 1.0 MB (PDF document)
• Annex A (1) CMR Impact Assessment , 163.8 kB (PDF document)
• Annex A (2) CMR Impact Assessment, 761.3 kB (PDF document)

More...

[Amethyst]

Re: Cutting costs for consumers in financial claims – Consultations – GOV.UK

ooo we get a mention

[EXC]

Re: Cutting costs for consumers in financial claims – Consultations – GOV.UK

ooo we get a mention

Excellent.

It's working then...

[Amethyst]

Re: Cutting costs for consumers in financial claims – Consultations – GOV.UK

Ahh it's so good... on the surface, still reading though.

Not sure about the 'voluntary code of conduct' - I always prefer formal - and there's two voluntary codes already that haven't made a lot of difference, being run by the industry itself doesn't work.


I'm quite looking forward to the Legal Ombudsman's response - are they allowed to respond?

[EXC]

Re: Cutting costs for consumers in financial claims – Consultations – GOV.UK

I'm quite looking forward to the Legal Ombudsman's response - are they allowed to respond?

I don't see why not. FOS responded to FSA consultations.

I reckon if they land up implementing anything close to this all the big players and many of the medium size players will go leaving the smaller guys who seem to be the best of the current crop.

[EXC]

Re: Cutting costs for consumers in financial claims – Consultations – GOV.UK

Blimey closes 26 Feb? That's my weekend out the window.

[Amethyst]

Re: Cutting costs for consumers in financial claims – Consultations – GOV.UK

I do think there are two sides to that, PPI reclaim fees have always seemed a bit backwards, larger firms should charge LESS as they have the economies of scale.... smaller firms might struggle if the bigger firms just ditch the market, making them not so could thus causing detriment to consumers.

But really why on earth anyone pays £468 out of a £1000 claim for a company to forward a from you've completed yourself, to a bank, and then on to the Financial Ombudsman... is beyond me. Misleading marketing, non-transparency of terms and fees and all these bloody cold calling firms .... Banning cold calling would be a big step forwards.

[Amethyst]

Re: Cutting costs for consumers in financial claims – Consultations – GOV.UK

Blimey closes 26 Feb? That's my weekend out the window.

Noooo that's the FCA one of the time limits for reclaiming PPI - this one has to 11th April.

[EXC]

Re: Cutting costs for consumers in financial claims – Consultations – GOV.UK

larger firms should charge LESS as they have the economies of scale....

Yes but they also have a disproportionaly large marketing/advertising budget, they have to because they rely on volume.

Oooh we get another mention.

[EXC]

Re: Cutting costs for consumers in financial claims – Consultations – GOV.UK

Noooo that's the FCA one of the time limits for reclaiming PPI - this one has to 11th April.

Phew!

[Amethyst]

Re: Cutting costs for consumers in financial claims – Consultations – GOV.UK

Interesting extra ''oh, and while we're here..." question on the end of the consultation

20.
Is there a need to consider further fee controls in other regulated claims sectors such as Personal Injury or Employment in future ?

[Amethyst]

Re: Cutting costs for consumers in financial claims – Consultations – GOV.UK

Impact Assessments

The annual benefit to consumers by the cap on completion fees for PPI/PBA claims and banning up-front fees has been estimated at £390m

There is a potential benefit to consumers, businesses and the Financial Ombudsman if the number of speculative claims and ‘nuisance’ calls reduces.

And of course.... ( funnily enough [MENTION=2]Celestine[/MENTION] & I were discussing exactly this consequence earlier )

There are various risks associated with this option. These include: that the decrease in profits for CMCs will reduce what the regulator collects to finance its operations, meaning it will need extra funding from the MoJ; uncertainty around the volumes of successful claims may mean our estimates of the costs to CMCs and benefits to consumers may be higher or lower than what has been presented in this impact assessment

CONSUMER AWARENESS ( F*CKIN' 'ELL!!!!)

There will be a cost to whoever finances the consumer awareness campaign.
We assume that a campaign will cost the equivalent of the FCA campaign described in their consultation. This would be £21 million annually for two years, costing a total of £42 million

I'll do it for half lol.

There is a risk with this option, in that the CMRU may not be in a position to conduct a consumer awareness campaign. Their remit is to protect both consumers and the claims management companies so warning consumers not to use CMCs goes againsttheir directive.

The proposed cap has been set at 15per cent (In c. VAT) as it provides a better reflection of the level of work typically required to pursue a claim.
A recent comparison website (lbcompare.co.uk) shows that out of 80 CMCs charging completion fees for PPI claims, 9 charged completion fees at or below the proposed cap. For CMCs dealing with PBA claims, the website showed 2 firms out of 19 charged at or below the proposed cap. This shows that completion fees in this range are viable and would enable the most efficient CMCs to operate and make a profit. Based on subject
matter expertise the CMRU also believe this level of completion fee is more aligned to the relatively simplistic nature of most PPI and PBA claims

[Amethyst]

Re: Cutting costs for consumers in financial claims – Consultations – GOV.UK

A brief view from the other side of the coin ( the advisers subject to complaints about PPI rather than the consumers ) http://www.moneymarketing.co.uk/govt...ce-complaints/

[EXC]

Re: Cutting costs for consumers in financial claims – Consultations – GOV.UK

From the Times.

The financial regulator faces the threat of a judicial review over its proposed deadline for payment protection insurance claims in what could be a huge blow to banks.

A claims management company has warned the Financial Conduct Authority that unless it tears up its consultation over a two-year cutoff for all PPI claims, which is due to conclude on Friday next week, it will seek a judicial review on the basis of a legal opinion that the deadline might be unlawful.

The threat comes as banks prepare to set aside billions of pounds in extra provisions for PPI claims alongside their annual results next week.

The UK’s biggest ever mis-selling scandal has already cost the industry £30 billion.

The threat of judicial review has come from We Fight Any Claim, which also objects to the FCA’s proposal to allow companies that sold PPI to keep half of their undisclosed commission on sales.

The Wales-based company said that it would act on the basis of legal opinion it commissioned from Stephen Knafler, QC, a senior barrister who said that the FCA’s actions were “probably unlawful”. He has claimed that the FCA’s plan for a campaign to raise public awareness of the looming PPI deadline was inadequate and a failure of its statutory objective of consumer protection.

Mr Knafler said there was a lack of detail about the campaign, including whether it would spell out the fact that many PPI policies had exclusions from payment for illnesses such as stress or back pain, some of the most common reasons people are absent from work and therefore might want to claim for.

He added that the campaign might not reach the elderly and other vulnerable groups, especially as the FCA had already admitted that “a majority of the PPI policies sold have not been complained about” despite the issue being in the news for more than a decade. The FCA’s plan to deal with unclosed commissions, which is the result of a Supreme Court judgment, was also flawed, according to Mr Knafler.

The FCA has proposed allowing companies to retain half of the fee that they originally charged. That was far higher than the cost of the sale plus a profit, which the authority had put at 16 per cent, Mr Knafler claimed.

The banking industry has lobbied for a cutoff for PPI claims and accused the claims management industry of making thousands of bogus complaints on behalf of individuals. Last week the Ministry of Justice proposed capping fees that claims companies can charge. Claims firms have taken about £3.5 billion in charges since 2011.

Andrew Tyrie, chairman of the Treasury select committee, who has been sent a copy of Mr Knafler’s opinion, said: “The FCA should ensure that the programme of work for PPI complaints does not bring detriment, or unreasonable delay, for the consumer.”

An FCA spokesman said: “The consultation process is designed to encourage all stakeholders to share their views so that they can be properly considered and the right policy put in place as a result.”

[Turboman]

Re: CAP on CMCs -Cutting costs for consumers in financial claims – Consultations – GO

I most certainly agree with a minimum cap of around 10% (or less) on CMC PPI reclaim fees.


Blimey---it’s not rocket science now like when me & Bill & Di had to handhold everybody and check/predict every offer of redress that was applicable

Now-under the Financial Authority rules everybody must be offered full transparency and be given detailed explanations of redress calculations. Generally (with a few exceptions like MBNA which Bill & others are still pursuing) the banks offer what is due—but even then—with the paperwork that they should have been supplied with, we here on Legal Beagles can still check that it is mathematically correct.


I commend the Legal Beagles site on being so actively involved with MOJ in raising issues and I see that the new LB Compare site is given due credence in comments by the MOJ.


A while back, we had an extrovert Solicitor with Videos (can’t remember his name) who was really looking for support and help in the type of sums that me & Bill did before he (the solicitor) submitted his case at court.


I, to my shame, had my head turned and thought I could be one of a CMC technical support staff and earn a few pennies.


However, I felt uneasy and almost ashamed on what I was contemplating, so I consulted my most respected friend on the site ( she’s Admin so most of you will know who she is!!)----and after brief discussion she said the nicest thing anybody has ever said to me on the site


“You are far too nice Turbs to be associated as a CMC”----Awwwwwwwwwwww—(Thnx A**)


Well done here to you all on LB for playing such a prominent role on the current consultation issues.
Hope to post further when I have read the PDF’s in detail included earlier in the thread.


Turbs