Which? lobbies government over CMC crackdown

Consumer group Which? has written to justice secretary Ken Clarke to urge him to overhaul how claims management companies (CMCs) work and to simplify how the public makepayment protection insurance (PPI) claims.

Which? said that it was “common practice” for CMCs to give misleading advice, unfair contracts and to hide how they charge fees.

The letter said: “It is likely that the bulk of the money being set aside for PPI redress will be distributed over the next year, so it is essential that urgent action is taken to encourage better supervision, self-regulation, tighter regulation and enforcement action against CMCs by the Ministry of Justice.

“Any delay in bringing forward much needed changes to help drive out the poor practice of some CMCs will only lead to further consumer detriment and additional costs across industry and the Financial Ombudsman Service.”

The letter was also signed by the British Bankers’ Association and personal finance website MoneySavingExpert.

Recent research from MoneySavingExpert.com and Which? found that a quarter of people didn’t know that CMCs take a fee, while only half knew that using a CMC would be no more successful than making the claim themselves.