Yorkshire Building Society in call for tighter regulation on claims companies (From Bradford Telegraph and Argus)
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Yorkshire Building Society in call for tighter regulation on claims companies
The boss of Bradford-based Yorkshire Building Society has called for tighter regulation on claims management companies (CMCs) who could end up costing the mutual millions of pounds.
Speaking on the day the society announced another strong financial performance for the first six months of 2012, chief executive Chris Pilling said the organisation was spending a “needless amount of money” on processing bogus payment protection insurance (PPI) claims, despite a “negligible” exposure to the mis-selling crisis.
The group yesterday reported an interim core operating profit increase of two per cent to £92.4 million – while pre-tax profit jumped from £73.1 million to £82.8 million.
Mr Pilling has declared the successful first half of the year is down to “prudence leading to profit”, but has warned the society was concerned with the practices used by CMCs when approaching consumers.
He said: “The bottom line really is the PPI scandal or mess or whatever you want to describe it as, is really a banking issue and is something that is affecting us significantly as a society but we think in a very detrimental and unfair way.
“The reason we think that is because we do get claims in and the vast majority come through the so called claims management companies who say they are acting on behalf of their customers or clients.”
The society has seen a 1,000 per cent increase in the number of claims from CMCs this year, of which 55 per cent have never even had a policy with them.
The mutual is required to pay £850 when a case it rejects is referred to the Financial Ombudsman Service, irrespective of the outcome, which has overturned just three per cent of its decisions, compared to 98 per cent for major banks.
Mr Pilling has now called on the Ministry of Justice to review its powers to investigate and strike off unscrupulous CMCs.
In the first six months of the year the group saw net lending of £523 million, with total mortgage balances growing to £27.5 billion.
Gross mortgage lending increased by 58 per cent compared to the same period last year. Mr Pilling said: “The strong performance of the group in the first six months of 2012 reflects our track record for adopting an ambitious but prudent approach to our business.”
A Ministry of Justice spokesman said: “We have made it very clear to businesses that we take a zero tolerance approach to any malpractice or attempts to take advantage of consumers, which is why we have a dedicated unit investigating claims management companies who mis-handle PPI claims.
“We investigate all complaints made against businesses.”