Unprofessional Practices exposed at some UK Claims Management Companies
21 Oct 2009 Tell a Friend
An undercover investigation by consumer organisation Which? has found that some claims management companies are actively discouraging consumers from making claims themselves. Which? researchers posed as consumers who were looking to make claims for unfair bank charges and mis-sold payment protection insurance (PPI).
During the 'mystery shopping' venture, 12 out of the 38 claims management companies asked about mis-sold PPI made claims about their success rate that they were unable to support. They implied that the researchers would be much better off using their company than applying themselves, even though an independent claim is actually free. This breaks Ministry of Justice rules on unfairly influencing consumers to use a paid-for service. Even more worryingly, 5 of the claims management companies were not able to say how they were regulated.
There are hundreds of claims management companies currently operating in the UK, helping consumers to claim back excessive bank charges and rebates on mis-sold payment protection insurance. Which? surveyed 68 claims companies in total, asking 38 specifically about claiming back money paid out on mis-sold payment protection insurance, and 30 about claiming excessive bank charged.
Martyn Hocking, Editor, Which? magazine says: "Claims management companies have some very crafty ways to encourage you to use them, from exaggerating their success rates to suggesting they'd be more successful at getting your money back than if you did it yourself. Not only are the firms breaking rules in some of these cases, but making a claim for mis-sold PPI or bank charges is a simple process, and you can do it yourself for free."
To meet the Which? standards, the companies needed to actually inform consumers that they were able to make the claim themselves if they wanted to, and to not suggest that the consumer would definitely have a more favourable outcome if they used the services of the claims company. They also needed to be clear and honest about the success rates that they'd had, make it clear from the very beginning what fees they would charge for a successful claim and tell the researchers how they were regulated.
Claims management companies usually charge 25 per cent of the total amount reclaimed by the consumer, with no fee (or a minimal admin charge) payable if the claim is not successful. Making the claim yourself is free, although it is important to be aware of the standard format for submitting the application, to maximise your chances of a successful application. It's worth noting that your bank does have the right to charge you for providing you with backdated copies of your bank statements, but this fee should come to no more than £10.
The UK banks and the Office of Fair Trading (OFT) have been involved in an ongoing dispute over excessive bank charges and the latest decision, from the House of Lords, is likely to be made in October or November. Find out more about how to claim excessive bank charges, if you feel that you have been charged unfairly by your bank.