The Building Societies Association (BSA) has called for increased action against claims management companies (CMCs) after witnessing a huge increase in complaints.
The BSA said bogus claims regarding mis-sold Payment Protection Insurance (PPI) have rocketed in the past six months, up 247%.
The Ministry of Justice (MoJ) recently announced it was targeting the sector, but a recent poll by IFAonline's sister title, Mortgage Solutions, suggested the mortgage industry is sceptical about its ability to crack down on fake claims.
Now the BSA has called for the MoJ to be given greater powers, saying that the mutual sector does not believe rogue CMCs will comply with existing legislation.
The BSA says its members are still being burdened with time-consuming investigations of bogus claims, often regarding products which the mutual did not sell to the claimant.
It is now asking that the regulator is given the power to impose fines for bad practice, and strike off repeated rule breakers. It should also be made easier for consumers to complain about mis-selling by CMCs, the BSA says.
Adrian Coles, director-general of the BSA, said: "The Ministry of Justice warning in August 2011 was clearly ignored. If anything some claims management firms have stepped up their irresponsible, speculative scattergun approach to non-sale claims.
This article continues...
FCA checked files
Properties do not exist
Follows active fee cuts in June