What future after the PPI deadline?
CMCs specialising in PPI mis-selling claims have been assisting clients for a decade. Had it not been for these CMCs entering the claims management market there can be little doubt the big high street lenders would have got away with keeping billions of pounds in PPI premiums for PPI policies that they mis-sold to their customers. True, some of these CMCs have made large profits from their enterprise, but in order to do so they have needed to develop expertise which, viewed in the round, is probably unique to those businesses. In achieving this, despite the negative reputation (some deserved, but mostly not) it is unarguable that they have facilitated access to justice for hundreds of thousands of ordinary people.
These CMCs have been highly successful in getting their message across and convincing hundreds of thousands of consumers to employ the service they are offering. In addition, they have developed claims processing systems capable of presenting large volumes of low value claims efficiently and therefore profitably. It would be a shame if this expertise and the skill sets these businesses have fostered in the thousands of staff they employ were allowed to disappear once the PPI pipeline has dried up. But at first sight it is difficult to see where this expertise could usefully be deployed post PPI.
Other types of financial claims such as pension and investment mis-selling do not lend themselves to the mass marketing techniques familiar to PPI CMCs and are typically of a complexity which makes processing claims in volume difficult. Following the demise of Wonga and with there being no FSCS route for claimants where loan companies have gone into administration, payday loan claims are not appearing to be the route to survival that some CMCs considered they might.
But have firms considered an entry into the personal injury market? Proposed increases in the small claims limit for RTA soft tissue claims to £5000 means that costs will not be recoverable from the opponent for claims worth less than this and the only way for representatives to be paid is to offer contingency fee arrangements. This will render these types of claims unattractive to the traditional solicitor firms that now dominate, and many will exit the market. One or two big business conglomerates of large CMC PI marketing businesses and solicitors may come to dominate the market. This will leave 100s of thousands of people suffering these types of accident each year with a very limited choice if they wish to access legal assistance with their claims. In the lead up to the change in April 2020 the MOJ will be trialling a ‘simplified’ claims portal, apparently in the hope that injured parties will choose to submit their claims without legal assistance. People working in the PPI claims market know from experience that this is a vain hope and instead many thousands of people every year will simply not claim the compensation to which they are entitled. This is almost certainly the expectation of large insurance companies that have been lobbying for these changes for years.
It may be possible for CMCs currently assisting clients with PPI claims to fill this void. They already have the marketing expertise to be able to successfully target these types of claim and have the infrastructure to, with some adaptation, be able to process these types of low value claims through the claims portals successfully and profitably in house.
CMC’s considering that this may be a viable option should also consider whether SRA authorisation as a licenced body (ABS) might be an advantageous route. The benefit would be that it would enable firms to offer a litigation service which would provide scope to be able to accept a wider range of claims. The downside is that firms would need to bring lawyers into their management structures, but, looked at positively, these might bring in specific expertise which could prove invaluable in executing the necessary changes to the claims process.
Steve Grinnell 21.1.2018
Steve has been a founding partner in Birmingham city centre solicitors’ firms and was responsible for developing systems to successfully conduct high volumes of housing disrepair and personal injury litigation on a no win no fee basis. Should you wish to discuss the issues in this article in more detail you can contact him on 07545 858648 or email him at firstname.lastname@example.org