The Claims Management Regulator at the Ministry of Justice (MoJ) has issued a special bulletin regarding payment protection insurance (PPI), aimed at claims management companies (CMCs) who assist with claims in this area. The bulletin is designed to highlight recent developments in PPI claims and to provide guidance in areas where issues have been identified by the MoJ.
The first issue highlighted is the time limit on submission of complaints to the Financial Ombudsman Service (FOS). In normal circumstances, a complaint will not be considered by the FOS if it is referred to them more than six months after the date of the final response letter.
CMCs are then alerted to the fact that many PPI providers are attempting to settle complaints on an ‘alternative redress’ basis. This essentially involves the financial institution deciding that regular premium PPI would have been more suitable than single premium PPI, and the redress offer may be calculated on the basis of the difference between the amount paid under the single premium PPI and the amount that would have been paid had regular premium PPI been taken. The compensation amount is likely to amount to significantly less than would be the case if a full refund of PPI premiums plus interest was offered. The MoJ is concerned that some CMCs are failing to identify alternative redress offers, or are dealing with them in the same way as a full compensation offer. The regulator advises CMCs to consult with their customers as to whether they are satisfied with their alternative redress offer. All offers of compensation for mis-sold policies should be calculated on the basis that the customer is put back in the situation they would have been in had they not purchased the product.
CMCs are asked to review their past business and identify any cases which they may not have handled correctly, relating to either the FOS time limit or alternative redress, and to consider what remedial action is appropriate in these cases. The bulletin quotes several rules which it believes CMCs may be in breach of if they do not handle such claims correctly.
The next item reminds CMCs of the open letter issued by the FOS in September 2013, which asks claims firms to ensure that information provided when submitting a complaint is accurate, complete and specific to the client. The bulletin asks CMCs to follow this guidance both when submitting the original complaint and when referring complaints to the FOS.
A reminder is then given that the deadline for responses to the consultation on changes to the Conduct of Authorised Persons Rules is January 9 2014.
Reference is also made to the requirement to conduct due diligence on any data providers that a firm uses with regard to marketing communications. If marketing communications are made in breach of the Telephone Preference Service rules, or to consumers who have not consented to receive them, then the CMC will be deemed responsible, even if a third party is used. It is not sufficient to rely on the data provider’s assurances in this area.
Elsewhere in the bulletin, firms are reminded of issues such as:
- Giving customers sufficient time to consider the pre-contractual information that CMCs must provide
- Alerting customers to where their internal complaints procedures can be located
- Disclosing typical fees in monetary amounts as part of the pre-contractual information
- Keeping customers updated as to the progress of their claim, particularly once the matter has been passed to the FOS
- Making the MoJ aware of whether they handle client money