PPI broker collapses in mis-selling scandalWednesday 1st June 2011
The finance company handling a backlog of PPI cases lodged against its former loan broking business has been placed into administration.
Wilmslow Financial Services (WFS) had been managing the wave of claims lodged against it from former clients who had taken out Payment Protection Insurance (PPI) alongside loans with Freedom Finance.
The company ceased to offer new loans last year and sold its loan broking business.
Phil Duffy, of insolvency firm MCR which has been appointed as joint administrator of the company along with Sarah Bell, told the TheBusinessDesk.com the company's shareholders were forced to call in administrators after the British Banking Association and several major banks recently announced they would no longer continue to fight a "super complaint" brought against them by Citizens Advice for mis-selling PPI insurance alongside loans.
He said that shareholders felt they had no choice but to seek administration as WFS’s potential liabilities were likely to considerably outweigh remaining assets.
In many cases, the level of compensation owed to former customers is likely to be several times the amount that WFS initially received in commission for selling PPI policies.
The Financial Services Compensation Scheme has issued a statement saying it "is aware that Wilmslow Financial Services Ltd has been put into administration".
It said that it was investigating how it could help those with claims against the company but said there was no need for claimants to contact them.
It said ‘we will publish an update on Wilmslow Financial Services as soon as more information is available’.
Under its compensation scheme, customers are likely to be able to reclaim 90 per cent of any policy money owed to them with no upper limit on the size of claim.
WFS was majority owned by US private equity firm JZ International, which bought a 55 per cent stake in the company in 2000.
Under the ownership of entrepreneur Rupert Webb, the Freedom Finance business prospered during the early part of the last decade and reached turnover of £45 million in 2006 - the year in which it sold its Freedom Lending mortgage broking division to Merrill Lynch for a reported £20 million.
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