Scots will miss out on legal protection from cowboy claims firms which are fuelling a surge in groundless complaints about mis-sold bank accounts.
New powers granted to the Legal Ombudsman this month to scrutinise bad behaviour by claims management companies will not cover any complaints made by consumers in Scotland. That leaves rogue firms free to resort to upfront fees and heavy-handed debt collection to make money on claims about packaged bank accounts (PBAs), which are much less lucrative than PPI claims.
The Financial Ombudsman Service said this week that it expected PBAs, fee-paying accounts which come with a range of extras like insurance, will be the only area to see rising complaints this year as the PPI bonanza draws to a close.
The Herald has discovered that claims management companies, which have pocketed more than £5bn in PPI compensation, are now responsible for 75 per cent of all cases referred to the Financial Ombudsman about packaged bank accounts. However, the number of cases upheld by the independent adjudicator has plummeted from 77 per cent to 46 per cent.
Mike Dailly, principal solicitor at Glasgow's Govan Law Centre, said: "The government has said it would be disproportionately expensive to set up a regulatory regime in Scotland, where there wasn't sufficient evidence of consumer detriment to justify this move. But I don't think it be would too costly to give an existing regulatory body additional powers. Surely it's only right in principle for someone to get redress in Scotland if they have been mistreated by a CMC."
Personal Finance P.21
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