Image caption PPI was designed to assist those who lost their jobs or fell ill

Banks and credit card companies have agreed to make the claims process for mis-selling of payment protection insurance (PPI) clearer and simpler.

People who believe they were mis-sold PPI can apply for compensation by writing to providers themselves.

But many have used claims management companies who then take a cut of any subsequent payout.

The agreement was made at a meeting with Which? and Money Saving Expert on Monday.

A separate meeting will also be arranged with representatives of claims management companies.

Their trade body said that some cases were complex and experts were needed to ensure claimants were not "short-changed".

The banks and credit card companies agreed to standardise complaints procedures across their industry.

They also said that they would work together to explain to consumers why they do not need claims management companies as well as calling for them to be more tightly regulated.

Payouts

PPI was supposed to repay people's loans if their income dropped because they fell ill or lost their jobs, but hundreds of thousands of people were mis-sold the policies.

PPI claims £1.9bn: Amount paid to victims of mis-sold PPI in 2011

£5bn: Estimate of compensation still to be paid out

£3,000: Typical compensation award

800: Number of claims management companies trying to win the custom of claimants

25%: Potential cut of any award taken by a claims management company

The bid for compensation has become a lucrative business opportunity for an estimated 800 claims management companies, who take a cut of 25% or more from the average £3,000 payout.

These companies are spending an estimated £2m a month on advertising, of which about £1.6m is on television advertising.

Richard Lloyd, executive director of Which?, said: "If people use claims management companies, they could be stung twice.

"They are stung once when sold payment protection insurance, and they will be stung again if a claims management company charges them a fee of 25% of more for doing something that they can do themselves."

However, Anthony Sultan, from the Claims Standards Council - a trade body that represents some claims management companies - said many cases proved complex so people needed help.

"We routinely find that banks do not pay the full amount of compensation to the consumer. They short-changed them," he said.

At the time I was not aware that I could contact my bank myself to claim PPI refunds Declan Sharkey, Made a PPI claim through a claims management company PPI victim 'dismayed' by company

"Only by doing some fairly complex calculations can you work out what the consumer is actually entitled to."

'Fully committed'

Banks paid out £1.9bn to the victims of mis-sold PPI last year, with many thousands of people having successfully applied for compensation.

Among those who have received payouts by using a claims management company is Declan Sharkey. He told the BBC that he received a call from a claims management company out of the blue.

"I never expected to get any money back but I was given about £400. The claims company took about 25% of my claim which left me with about £300," he said.

"At the time I was not aware that I could contact my bank myself to claim PPI refunds. I was led to believe that the process was more complicated than that. Now I am annoyed that I had to give up some of my own money."

Other BBC News website readers have explained how they received compensation from banks with simple phone calls and letters.

Banks are now writing to millions of people who may have been mis-sold PPI, but have yet to lodge a complaint, with another £5bn still expected to be paid out.

"Currently the vast majority of the complaints we receive about PPI come from claims management companies, and over 22% of these complaints are on behalf of people who have never even had PPI," said Brian Cole, managing director of Capital One, who is attending the summit.

"We have always been fully committed to providing appropriate compensation to customers who were wrongly sold PPI. However, the involvement of claims management companies means that customers end up paying unnecessary fees to them when they could approach their bank or credit card company directly and get the same outcome for free."