| Claiming PPI Compensation, Claims Management Companies, Financial Regulators, PPI, PPI Scandal

According to a report by the Information Commissioner’s Office, Prodial Limited, a claims company, has reportedly generated mammoth revenue. This has amounted to £1 billion by making unnecessary and excessive cold calls to the public.

 

The Emergence of Claim Management Companies After the PPI Scandal Came to Light

Cold calling related to PPI started when the mis-selling scandal first came to light. Thousands of customers started claiming for compensation after realising that they had been wrongly sold their policy. The heavy volume of complaints and the ever-increasing amount of funds to be compensated compelled all the involved financial institutions to focus their attention on sorting out the PPI issues of the customers.

Initially, there was only one way of making a claim for compensation relating to a mis-sold PPI policy. The mis-sold customers had to directly get in touch with their lenders, follow a set procedure and then hope for the best when it came to getting a final response from the lender. However, as the months passed, the number of complaints started to pile up. This led to the emergence of many private claim management companies. These companies would handle the responsibility of making a claim on behalf of their client on a No Win No Fee basis.

After approaching a claims company, all a customer would have to do is provide them with the relevant documents. The CMC (Claim Management Company) would then move forward with the rest of the procedure on behalf of their client. As more months passed, the number of claims management companies started to increase and in no time they began competing with each other.

As has always been the case, competition sparked a number of promotional activities amongst the claims management companies.

 

PPI, CMCs and a History of Cold Calling

Claims management companies started marketing themselves like any other business organisation. And one of their several marketing techniques included calls to prospective clients to check if they were mis-sold a PPI policy.

This was supposed to be a method of direct and personalised marketing. The company would call a prospective customer and ask them to check if they were mis-sold PPI. If they were, the company would offer to take on their case and help them get their refund.

This continued normally for some time, until certain organisations began misusing it. Out of greed, claims companies started making cold calls to many customers at random asking if they were mis-sold a PPI policy. While a couple of calls might still be considered tolerable, certain companies started making a series of calls on a daily basis.

Certain CMCs allegedly bombarded the public with more than 46 million unnecessary cold calls regarding mis-sold PPI. Over the last decade, the PPI scandal continued to grow. And as a result, several claims management companies have cropped up in order to help the mis-sold buyers. It is generally a fairly long process to file a complaint and receive compensation on a PPI claim. Claim management companies take the charge of settling your claims and work on your behalf to help you receive your PPI refund on time.

However, many companies resorted to making cold calls to prospective customers and earning money out of the same.

 

Prodial Limited — The Case

Prodial Limited is a Brighton-based CMC set up by 27-year-old Louis Kidd in East Sussex. He later sold the same to his business partner Phil Carrington. The deal cost him around £40,000.

The company apparently earned £1 million in turnover from these unwanted calls, according to the Information Commissioner’s Office (ICO). The ICO acts as the Government’s regulator of data protection. ICO regards this as the highest fine in the history of cold calling companies and also describes the company’s behaviour as the worst case of illegal and unwanted calling.

More than 1000 people have reportedly complained about the calls made by the company to them on a regular basis. These were majorly automated calls made to ask them about their PPI policies to check whether they were mis-sold. Most of the complainants said that they often received such calls and what’s worse is that there was no opt-out option for them to ignore the call.

One of the complainants also said that they felt helpless, as they had no option to stop the calls that kept coming day and night, acting as huge intrusions. Amongst the complainants was a doctor who claimed to the authorities that they received calls at all times of the day, even during the case of a medical emergency.

The company was found out to be operating from a residential property and was successfully hiding its identity from the callers. This made it even more difficult for people to report the calls and tag them as cold-callers.

Prodial Limited had a reported £100,000 turnover per month from its business activities. The company was then placed into voluntary liquidation, which led to the ICO team of enforcement recovering fines by working with insolvency experts.

 

Law’s Related to Cold Calling in the UK

Something that might have slipped the cold callers’ minds is that in the UK, companies’ low-cost marketing calls are recorded. The law also clearly specifies that such calls are only supposed to be made to people whose consent is specifically taken when contacted. An ICO investigation discovered that there was no such consent taken by Prodial Limited.

The investigation also discovered that by making such calls to people, Prodial was sending the information gained through the calls and the receivers’ personal details to various claim management companies.

Information Commissioner Christopher Graham made an official statement saying that it was one of the worst cases they had ever seen that involved a series of cold calls leading to such huge revenue for the company. The volume of calls made in a month itself was staggering.

As there were more and more people coming up with their mis-sold PPI issues, the company decided to randomly target people who were or were not the victims, and make money out of the process anyway!

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