Claims management companies rake in £7.4m mis-sold PPI profit

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The Financial Services Compensation Scheme (FSCS) has paid out £136m in mis-sold PPI claims since 2008.

More than £89m has gone through claims management companies and the number of consumers making claims for mis-selling from failed firms increased by 70% last year, the FSCS has reported.

The figures also showed more than 19,000 people submitted claims in 2012, up from 11,000 the previous year; 59% came from claims management companies (CMC), worth £29m of claims.

CMCs typically take a 25% cut of the compensation so UK consumers which totals roughly £7.4m where consumers could have claimed from the FSCS for free.

But the figures show a fall from 2011 when 76% of claims went through CMCs and only 24% from individuals.

Mark Neale, chief executive of FSCS, said: "Claims management companies take a sizeable chunk of any pay-out.

"Consumers who make a claim directly to FSCS keep every penny of their compensation. Some people may prefer to use a claims management company, but it is important that they understand the charges from the outset and are happy to pay them."

The average pay-out to individual claims in 2012 was £4,895, compared to £3,837 through a CMC, the FSCS data showed.

And according to the compensation scheme, consumers have paid more than £22m in compensation to CMCs since 2008.

The FSCS has processed 4.5m claimants and paid out £26bn since 2001; between 2008 and 2012, £136m of this total was for PPI claims.

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