Won a PPI payout? Check the claims management company did the work

Successful claimants of payouts over mis-sold payment protection insurance (PPI) have been warned to view unsolicited invoices from claims management firms with scepticism.

PPI was sold by high street banks throughout the Nineties and 2000s alongside credit cards, mortgages and other loans. The cover was meant to pay out in the event of a change in life circumstances for the consumer, such as losing a job or falling seriously ill. Often, few checks were carried out, meaning many purchasers were already covered by existing, separate policies.

The mis-selling of PPI has been a bonanza for claims management companies (CMCs), which manage complaints on consumers’ behalf and claim a percentage of the payout.

However, it is usually easy to make a complaint yourself.

Telegraph Money reader Carl Mitchell, 74, was issued with an erroneous invoice for a third of his £1,031 payout by Allay Claims, a CMC, despite his compensation being proactively offered by Lloyds Bank.

His initial complaint was rejected by the bank and a complaint to the Financial Ombudsman Service proved fruitless. He later instructed Allay to challenge the decision, but this too was unsuccessful.

However, in 2016 after a change in approach from the ombudsman, Lloyds reviewed his case and offered him compensation. As Allay was still attached to his complaint, the

company was notified and promptly issued him with an invoice for £371 despite playing no role in securing the payout. After seeking advice from the Legal Ombudsman, Mr Mitchell, a retiree from Dorset, succeeded in getting Allay to withdraw its claim to a part of his cash. After Telegraph Money’s involvement, Lloyds also offered him £200 as recompense for wrongly notifying Allay of the payout. A Lloyds spokesman said: “It is our aim to help our customers as best we can when they contact us about PPI, and we are sorry that confusion over the authority given to a CMC occurred when processing the compensation to Mr Mitchell.” Allay did not respond to a request for comment. Martyn James, of Resolver, a consumer complaints service, said he had seen a number of CMCs staking “spurious claims” to compensation payouts and that he expected to see a glut of legal cases after the PPI window closes on Aug 29. “The mistake people often make is they contact the CMC, realise they can do it themselves for free and go it alone, but then get hit with an invoice,” he said. “If you have already signed up with a CMC, it’s not too late to do it yourself.” Consumers should notify the CMC in writing that they no longer wish to use their services. Provided the firm has not already done a significant amount of work, the company should honour this, he said. The amount Allay Claims wrongly tried to charge Carl Mitchell after his PPI payout

Lauren Davidson

Head of Personal Finance @laurendavidson

Sam Brodbeck

Personal Finance Editor @sambrodbeck

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