It is a market which has been really good to them.
Some £39bn has been handed out to consumers, of which the claims companies have kept up to 30 per cent.
Market experts reckon that the full cost of PPI will come in at nearer £50bn - or five times the cost of the London Olympics.
Over the years there were an awful lot of genuinely mis-sold PPI policies out thereThat is an income for claims companies of between £10bn and £15bn. Nice work if you can get it.
Little wonder that they are keen to find new targets. They want to keep their extremely profitable model going and have huge operations to feed.
It has to be said, undoubtedly, that over the years there were an awful lot of genuinely mis-sold PPI policies out there.
If you were looking to take out a loan in the 1990s and early 2000s, there was a high probability that a bank would say at some stage in the application process that success was heavily dependent on having PPI.
But, equally, there is really no doubt that there have been an escalating proportion of claims that were unfounded.
Claims management companies have played the system, knowing full well that banks would often not have all the documentation necessary to prove PPI was correctly sold.
They also knew that each claim forwarded to the Financial Ombudsman Service would cost the lender a standard £550 fee, plus the considerable manpower cost involved in processing, so lenders were willing to settle, just to get claims off their radar.
Lenders often had veritable mountains of claims that had to be turned around in the timeframes set down by the regulator.
Get behind, and they were looking at even steeper costs.
The claims chasers knew this, and the fact that there was no downside for either the claimant or for them.
As Barclays finance director Tushar Morzaria admitted this summer, claims companies had been "swamping the bank with vexatious claims".
Well, those that are in any way involved in consumer lending or providing investment products now need to sit down and take a deep breath.
Compensation
These self same claims companies that have spent the past 10 years perfecting the art of securing PPI compensation, often on flimsy grounds, are in the process of turning their full attention on you.
The 1,500 claims management companies - that sent out 2.7bn unsolicited call, texts and emails every year during PPI, the equivalent of 50 per adult per day - are now focusing their efforts towards chasing claims of mis-sold consumer credit.
And they do not have far to look, given that the PPI forms they have asked consumers to complete also had sections requesting details of all loans taken out.
The modus operandi of claims companies mean we can expect the same carpet bombing of daytime TV adverts that there was in PPI, but this time suggesting to consumers that they’d be mad not to make a claim against the provider of their consumer loan, credit card and investment.
For companies such as those whose lending book consists substantially of smaller loans of under £1,000 this scenario could be disastrous.
I spoke to a medium-sized unsecured lender recently who told me that claims were already costing him £30,000 per month.
He had an all too familiar story.
Over the space of six months or so, he had been inundated with claims for mis-sold loans, most of which were from claims companies.
He was getting cases in batches of 200-or-so from one claims company that was acting in the same manner as packagers used to in the mortgage market.
Among these cases were claims from individuals who had only been granted a loan the previous week.
And, when contacted, they had no knowledge of making a mis-selling claim.
Calls to this particular claims company go nowhere, he says.
You cannot speak to anyone who is able to access information on a specific case, suggesting that much of the claims process is automated and that leads are bought from data platforms.
He is particularly indignant because of the cases against his company that have gone to the ombudsman, only 6 per cent have been upheld.
Although there is buoyant lending demand, he wonders whether some lenders might now be wondering whether it is time to shut-up shop, given the exposure they have.
Several years of lending in the high-cost, short-term market is likely to mean many thousands of potential claims.
He is certain - as I am - that if there is no regulatory or government action on this, we are looking at the beginning of another multi-million pound drain on the financial services sector caused by a tsunami of claims that really do not have any merit.
Unfounded claims
What is needed swiftly is a change to the "heads-you-win, tails-I-lose" claims environment that the UK has still in place.
The FCA should be seriously considering some form of penalty for those who pursue unfounded claims. All it would take would be the possibility of a downside.
We have already seen how this can be beneficial in the area of fraudulent personal injury claims.
A handful of well-publicised actions taken against individuals resulted in a 19 per cent drop in claims last year, according to Ministry of Justice figures.
Surely it is about time that something which acts as a fraud disincentive should be considered by the regulator.
Genuine claimants would have nothing to fear, only those individuals, and companies, making a living out of gaming the system.
David Wylie is director of LendingMetrics
