2000: The Claim – Winterbottom
As a financial planner determined to cut through the nonsense and provide a high quality service to clients, it saddens me to continually read about further scandals. The financial services industry is certainly well short of perfect and the most recent mis-selling scandal was for Payment Protection Insurance (PPI). You probably will not be surprised to learn that I have never been a fan of PPI – preferring (by a country mile) proper Income Protection cover – if necessary. The vast majority of the sale of PPI was conducted by Banks and Lenders to those applying for credit. In principle the theory was (and still is) perfectly sound – insure against your inability to meet your liability, however, with the case of PPI, often the cover was poor (at best) and in many cases would not have paid a claim. In addition some people did not even know they were paying extra for this benefit. Finally this sorry tale was corrected by agreement of fault and large compensation claims now headed towards the guilty parties.
So what? well perhaps if you have access to more than 5 television channels and the occasional newspaper or surf the web, you will almost certainly have come across “claims companies” the equivalent to the proverbial ambulance chaser, invariably suggesting that they work for free to help you get money back, which of course to anyone with a modicum of intelligence is complete nonsense. Adverts often state that a firm is regulated by the Ministry of Justice, which all sounds rather grand and reassuring, but isn‘t. In fact the Ministry of Justice has closed around 20% of claim firms in the last year and had to double its staff to deal with the increased investigation of claim firms, many of which are completely bogus. The investigation is ongoing following the floodgate moment of approval for legitimate claims. Perhaps you have been emailed or even phoned – I have (several times). To my mind, it seems that claims companies appear to be breaching the data protection act by contacting you in any event, let alone making false promises. Typically 40% to 50% of claims being received for PPI are invalid. This is a huge waste of time and resources that ultimately will cost us all much more.
Legitimate claims for compensation should be properly settled, it is not difficult to complete any required paperwork by yourself (only 20% of people do) and you don’t need a specialist claims company (which 80% currently “employ”). The very existence of such organisations makes my spirit sink as we become an increasingly more litigious society that grows to be more like the US with a culture of blame and failing to take responsibility. The Ministry of Justice have a very good fact sheet on this topic.
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