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New caps on financial claim fees


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Fees for winning financial claims cases such as mis-sold payment protection insurance are to be capped, under proposals to protect consumers from high charges by some claims management companies (CMCs).The Ministry of Justice plans to cap the maximum completion fee at 15% on ‘bulk claims’ with a single lender, and cap the overall charge for claims worth more than £2,000 at £300.

 

 

The government said the changes will stop companies charging ‘exaggerated prices’, which it said can amount to as much as 40% of total financial compensation.

 

According to the government, CMCs have taken an estimated £3.5bn in charges since 2011. It said that there is ‘widespread concern’ from consumer groups, banks and insurers that CMCs continue to make speculative claims through aggressive marketing and nuisance calls.

 

The proposals also include introducing a maximum ‘cancellation’ fee of £300 for bulk claims, as well as bans on referral fees for PPI or packaged bank accounts claims, upfront fees, and fees where no relationship is found between the consumer and a lender.

 

The MoJ has also proposed capping the maximum fee to 25% of total compensation in any other financial cases.

http://www.lawgazette.co.uk/law/new-caps-on-financial-claim-fees/5053644.fullarticle

 

 

The consultation seeks views and further evidence in relation to proposals to:

 

  • cap the maximum completion fee to 15% (including VAT) for bulk claims (such as mis-sold payment protection insurance claims) with a single lender and cap the overall charge for claims worth more than £2,000 in total to £300
  • introduce a maximum ‘cancellation’ fee of £300 for bulk claims when a consumer cancels their contract with a claims management company after the initial 14 day ‘cooling off’ period
  • ban CMCs from receiving or making any financial payment for referring or introducing a consumer to a third party in relation to a PPI or PBA claim
  • ban any fees where no relationship is found between a consumer and a lender
  • ban all upfront fees for all financial claims, where CMCs ask to be paid before any work is carried out
  • cap the maximum completion fee to 25% (including VAT) of the final amount of compensation awarded in all other types of financial case

https://consult.justice.gov.uk/digital-communications/cutting-costs-for-consumers-finanical-claims

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