Fact sheet

Claims management companies and Payment Protection Insurance

The mis-selling of Payment Protection Insurance is still in the news and many claims management companies are heavily promoting their services, through adverts and cold-calling.

This fact sheet aims to provide helpful information, either if you think that you have been mis-sold Payment Protection Insurance (PPI) by a building society or other mutual lender; or you have received unsolicited contact from a claims management company (CMC).

I think I have been mis-sold PPI

  • Some consumers will be entitled to compensation for the mis-selling of PPI by their product provider
  • Consumers have an absolute right to complain and seek compensation if they believe they have been mis-sold PPI.
  • However, before making a claim it is worth checking whether you have a PPI policy.. This may sound obvious, but in around 57% of the claims made to building societies and other mutual lenders by CMCs, the product had never been sold to the consumer by that firm.
  • If you do believe that you were mis-sold PPI it is best to contact the organisation which sold the product to you straightaway. They will be able to confirm that you were sold the product and tell you whether you may have a case for compensation. If you prefer not to talk to the product provider you can check whether you might have a claim by visiting Which? Click here: Which? Consumer Info
  • If you then want to complain, you can make your complaint directly to the firm that sold you the product. If you are not happy with their response you can subsequently complain to the Financial Ombudsman Service.
  • You can of course complain via a CMC, but is worth bearing in mind that if you are successful and receive compensation the CMC will typically keep around 25%. They will not be doing anything that you can’t easily do yourself

What should I bear in mind when making a claim?

Many building society customers are being contacted by CMCs and it is not unusual for them to press consumers into making a claim for compensation for PPI. Here are some things that you should bear in mind before making a decision to use a CMC:

  • These firms are not doing anything that you cannot easily do yourself, direct with the firm that sold you the product.
  • You have no better access to the firm you bought the policy from or to the Financial Ombudsman Service by using a CMC.
  • In fact there is no factual basis for claims that using a CMC will guarantee a higher level of compensation award.
  • If you claim direct and are awarded compensation 100% of it goes to you.
  • Typically a CMC will charge you a fee of 25% or more of any compensation that you receive and this could extend beyond any lump sum to include any reductions in your monthly payments for the associated loan.
  • The Ministry of Justice website has some useful information for consumers you can access it by clicking here: MoJ Consumer Information

What questions should I ask a CMC before I decide whether to use them?

  • Is the CMC you are proposing to use registered with the Ministry of Justice? You can check this on the Ministry of Justice Website here: CMC Registration
  • Has the CMC given you up front, written information about all of their fees?
  • Have they told you that there is a free alternative route for making your complaint? If the answer to any of these questions is “no” you should consider whether it is wise to do business with that company.


  • No CMC should ask you to pay an upfront fee.
  • CMCs do sometimes use high pressure selling techniques to induce consumers to make a compensation claim. If feel that you have been pressurised by telephone or doorstep selling and you want to make a complaint about the company concerned you can complain to the Ministry of Justice, the regulator for CMCs. You can access their complaints information here: MoJ Complaints Information
  • If you feel that a CMC is pushing you to make a decision to use their services, you are absolutely entitled to take your time.
  • If you feel you have been have been pressurised into making a claim and are having second thoughts, you do have the right to withdraw. Cancelling a particular claim would not take away your right to make another claim later. Your can seek advice on how to make a second claim from your product provider.
  • The mutual sector which includes Building Societies and the Co-op Banking Group has a good reputation for fair and consistent treatment of PPI compensation complaints: Mutuals account for just 4% of PPI complaints to the Financial Ombudsman of which just 22% were upheld and the firms’ original judgement revised.


Useful information

If you have been the target of PPI-related cold calling, you may find the following advice useful:

  • You should NEVER respond to text messages from companies offering to claim back PPI on your behalf, even if you are saying 'stop' or 'no'. In many cases simply replying will validate your number to companies overseas who then sell numbers on to claims management companies in the UK.
  • You should forward these texts onto your network provided using the numbers below:
    • 7726 - Orange, EE, O2 or T-mobile
    • 87726 - Vodaphone
    • 37726 - 3
  • The more that are forwarded, the more likely it is that action will be taken by the relevant network to block these messages.
  • You can also report misleading advertising to the Advertising Standards Authority (ASA).

Download printable version


Simon Rex

Information Services Manager

Tel: 0207 520 5914 simon.rex@bsa.org.uk