IONA BAIN

When was the last time you received a call or text from a stranger, asking if you've been mis-sold payment protection insurance?

The perpetrators of these cold-calls, claims management companies, have pocketed at least £5bn of compensation owed to millions of customers who were flogged PPI.

Now they have embarked on a new round of phishing trips to see how many Scots have been wrongly sold a "packaged" bank account, as experts worry that desperate firms will resort to upfront fees and tawdry tactics to profit from a far smaller pool of valid complaints.

The Herald can reveal that the majority, 75 per cent, of PBA complaints received by the Financial Ombudsman now come from claims management companies, almost matching their share of PPI cases - 77 per cent.

Yet the number of PBA complaints upheld, that is accepted by the ombudsman, has fallen since last year, from 77 per cent to 46 per cent, despite the underlying number of cases doubling in that time.

Are claims management companies making spurious complaints and wasting the Ombudsman's time? A spokesperson told the Herald: "We've spoken to CMCs to make it clear that we don't expect to see 'generic' complaints submitted that don't address what the consumer's concerns actually are - as these are unlikely to succeed."

Last autumn, the Claims Management Regulator confirmed it had warned several CMCs for failings over PBA complaints, which included "accepting claims from unauthorised businesses, making mis-sold claims without thoroughly substantiating them and using generic letters of claim".

The Citizens Advice Bureau has urged the regulator to be vigilant on upfront fees as CMCs move into different redress markets which require "more extensive and complex work...with a lower chance of success".

Herald readers are seeing a rise in nuisance calls from companies enquiring about current accounts they don't have, coinciding with an online recruitment drive for PPI cold-calling veterans who can switch to this new area.

Current accounts increasingly come with a range of "benefits" in return for a monthly fee. Yet research from YouGov suggests these controversial products have been mis-sold to at least one in five banking customers.

Many were given misleading information, made to feel the accounts were compulsory or later found they were ineligible to use extras like travel insurance. They have the right to claim compensation, amounting to all PBA payments plus 8% interest, from their bank before referring their case to the Financial Ombudsman if the complaint is rejected.

But the ombudsman says these new cases are proving to be less clear-cut, with many packaged accounts proving to be good value for money. The spokesperson said: "Some of the people we speak to have expressed some concern about the withdrawal of these accounts as they've found the benefits useful, cost effective and have used them to make a number of successful [insurance] claims."

Mike Dailly, principal solicitor at Govan Law Centre, agreed. "PPI was generally sold to folk who either never used it or were told there was no choice about it - it was whacked onto the consumer credit agreement. Many were getting a good service on 90 per cent of the extras so it wasn't not like consumers were getting absolutely nothing from these accounts. Also, consider that the average PPI claim was £3000 but looking at the average value of PBAs, the cost was £200 - £300 over the year."

Mr Dailly went on: "Customers with these accounts could be hoodwinked into paying upfront fees to a CMC (claims management company) and they may be in for a surprise when they discover they are entitled to nothing, or what they may get is a very small sum after a very long wait."

Yet CMCs are claiming big compensation is available, including one firm which has been advertising for a "professional telesales person for cold calling" on a respectable freelance website.

The post on peopleperhour.com claimed that "typical payouts of compensation are around £1,800, up to £3,000". The role, which attracted 13 applicants and has now closed, offered £15 per hour as well as 10% commission.

Citizens Advice published a scathing 36 page report on CMCs last year in which it highlighted a pensioner who had been charged £250 as a "non-refundable membership fee" on an unsuccessful PPI claim. It also drew attention to clients who had been automatically charged or chased for money, despite cancelling their agreement with the CMC within the statutory 'cooling-off' period of 14 days.

The ombudsman has previously spoken about "an encouraging improvement in the way some banks investigate and deal" with queries over PBAs, contrasted with widespread criticism over the sector's approach to PPI grievances. The spokesperson added: "We've also made it clear what we consider an 'acceptable' settlement looks like, so any dispute can be resolved with the bank without the need for the ombudsman to get involved.

"We spoke to the banks about packaged accounts and the ombudsman's approach when complaint numbers began to rise. We're pleased to say that we're starting to see evidence that our guidance is being followed."

The ombudsman has long made it clear that customers do not need to use a CMC to mount any complaint on their behalf.

Two weeks ago, the Advertising Standards Authority banned three internet adverts for The Claims Guys following a complaint from Lloyds Banking Group. The ASA said it was "misleading" for the company to claim that customers could receive £3542 in compensation over LBG packaged bank accounts and that they could quickly find out their eligibility by clicking on a link.