The claims companies riding the PPI gravy train The Lloyds chief's concerns are shared across the banking industry and among consumer protection groups. Worryingly, none of the websites of claims firms that appear on the sponsored links on Google when searching for PPI specialists are members of the Claims Standard Council, the representative body of Britain's claims management companies, although membership is not compulsory. There has been a vast amount of wasted effort by the banks - it takes an average of between five and six hours to assess the validity of every compensation request they receive. A 6,000-strong division has been assembled at Lloyds to process the millions of compensation requests it has received, however, it has found its work frustrated by an influx of claims from individuals who either were never sold PPI, or in some cases are not even customers of the bank. Last month, one firm, the name of which is not known, sent Lloyds 55 cases of alleged PPI mis-selling, however, 40 of the claimants turned out never to have even been sold PPI. Anecdotal evidence suggests that of the cases put forward by another rival firm, two-thirds are for claimants who have never been sold a PPI policy by the bank. The blanket claims were perhaps inevitable after Britain's biggest banks last year conceded defeat on the issue. Advice to consumers has generally been to claim if they have even the merest suspicion they could have been sold PPI, as much of the scandal revolved around pushing the product on customers who were often unaware they had even taken out a policy. However, with claims managers normally pocketing between a quarter and a third of the money refunded to customers by the banks, there is a huge incentive for firms to chase down even the most spurious case. Gladstone Brookes, one company in the PPI claims space, has been open about the impact it expected the banks' multi-billion pound concession on PPI to have on its business. Accounts filed for the 12 months to the end of July last year, describe the decision as "welcome news for the company" and that it experienced a "significant increase" in claims after the banks lost a High Court ruling in April 2011. But it is questionable whether the PPI route is paved with gold. Investor Compensation (claims) LLP owns the PPIClaimback.co.uk website. The firm's Companies House accounts only require it to reveal the most basic details of its finances, however, those of its parent, Mitchell Farrar Group LLP, are more revealing. In the 12 months to the end of March 2011, Mitchell Farrar reported a more than quadrupling in its turnover to £9m, while its staff costs increased six-fold to £3.8m. However it reported a loss of £1.3m, following a profit the previous year of £343,210, partly as a result of what it said was "ongoing revenue expenditure on marketing and other new business activities," which could include its highly active chasing of PPI claimants. Mitchell Farrar did not respond to a request for comment. For consumer watchdog Which?, the practices of some claim managers led it last month to hold a joint summit along with MoneySavingExpert.com to alert bank customers to sharp practice by firms and inform them of the ease of making their own PPI claims against lenders. It's a scandal that too many CMCs [claims management companies] have been ripping off consumers who don't realise there are simple steps they can take to claim back their money themselves. We're saying to people today - don't get robbed twice," said Richard Lloyd, executive director of Which?, last month. This is a sentiment echoed by the banks. "We would encourage any customer who believes they may have been mis-sold a PPI policy to approach us directly so that we can continue to redress customers efficiently and so they are recompensed in full," said a spokesman for Lloyds. The Ministry of Justice is responsible for regulating claims managers and told The Sunday Telegraph last week that it took a "zero tolerance approach to any malpractice or attempts to take advantage of consumers." The ministry has set up a dedicated unit to investigate unscrupulous PPI claims. "We investigate all complaints made against businesses and where a breach of rules is identified, enforcement action is taken that can result in the business being closed down," said the spokesman. Ministry officials have been kept informed of bogus claims by the banks, with lenders expected to pass on the details of firms they suspect of pushing through claims they know to be without merit. However, with PPI claims well on the way to be being paid - Lloyds said last week that it had already paid out £1.8bn to customers - there are signs the firms are already on the lookout for their next pay day from the banking industry. The most obvious target at present is increasingly looking like the growing scandal of interest-rate swap mis-selling. Several claims firms are already targeting advertising at small and medium-sized businesses that were largely the victims of the practice and the signs are that some of the practices being employed suggest already-vulnerable business owners could be taken for a ride by those claiming to be on their side. One financial expert who is advising several small businesses that are accusing banks of mis-selling them complex interest-rate hedging products, said he had been shocked by the stories of some businesses. In one case, a businessman had been charged £6,000 upfront by a claims firm that also said it wanted 15pc of any compensation he won. The firm then promptly passed the man on to a law firm which proceeded to charge him another £6,000 in upfront fees and said it wanted a 30pc slice of his compensation. To add insult to the injury, the law firm in question has no experience of complex derivatives cases and its lawyers privately admitted to the expert that they knew very little about how to prosecute the case. "This is a rip-off worse than the banks in the first place," said the expert. Stuart Brothers, a partner at SRBlegal, which has been working on interest hedge mis-selling cases for three years, admitted he had been horrified by some of the things claims managers had told clients. They give people the impression that this is just another PPI and that they are likely to win, when in fact these are hugely complex cases and the outcome is anything but certain. On top of this, there is often no proper analysis of the case from the start," said Mr Brothers. Experienced practitioners have already begun forming professional associations to provide potential victims with a quicker and cheaper upfront assessment of their case. QA Legal is one such group that has been formed by lawyers and barristers to deal with swap mis-selling claims, while other plans are under way to set up an independent claims handling process in concert with the banks to provide a one-stop-shop for cases. But, with potentially even more money at stake than with PPI - some estimates suggesting the total bill for banks could be between £10bn and £20bn - it is likely unscrupulous claims firms will find the area too hard to resist.