Have you had an accident or been mis-sold payment protection insurance? You could be entitled to thousands of pounds in compensation.
Sound all too familiar? The barrage of telesales calls from Claims Management Companies, especially since the High Court ruling on banks and their mis-selling of PPI, which the banks lost and are not appealing against is no surprise. And the chances are that even more adverts will appear promising to get you money back on PPI, getting you compensation or helping you become debt free.
With statements like ‘Write off all your debt’ and ‘Reclaim mis-sold PPI’, they are designed to grab your attention.
‘Claims management’ may conjure images of solicitors dealing with personal injury claims, but there are a large number of claims firms which specialise in financial services claims – from consumer credit agreements such as credit cards and loans to bank charges and PPI.
Many CMCs also advertise themselves as being able to write off credit agreements, especially credit cards and loans. They claim that they can wipe out debts on credit agreements taken out before April 2007. As tempting as their offers may seem, we don’t feel that this is strictly true.
If you’re thinking about using a claims management company (CMC), we suggest that you think again.
Which? underwent an undercover investigation of claims management companies, of the 45 companies they called about reclaiming PPI and bank charges, almost a third had serious shortcomings – exaggerating success rates, discouraging customers from pursuing claims themselves or failing to be upfront about charges.
The Financial Ombudsman Service (FOS) has also expressed concern about whether such companies are of any benefit to consumers, particularly because of their high fees.
Since late 2006, these firms have been regulated by the Ministry of Justice, which has also issued warnings about upfront fees and misleading statements – such as ‘guaranteed’ and ‘100% success rate’ – and a number of companies dealing with financial services have had their licences cancelled or suspended by the MOJ.
How CMCs can work
PPI makes loan or credit card repayments if you’re unable to work or lose your job. But it has often been mis-sold, with consumers believing that PPI was mandatory or not knowing it was included. Some policyholders would never have met their policy’s criteria for a payout.
If PPI has been mis-sold, you can reclaim premiums paid in the last six years, either from the company that sold the policy or, if it doesn’t cooperate, you can take your case to the Financial Ombudsman Service (FOS).
A CMC will try to persuade you to let it process this claim on your behalf, taking commission of upwards of 25% if it’s successful. While this could take some hassle out of claiming yourself, a recent review by the FOS noted that many PPI cases overseen by CMCs lack adequate information, which can delay the process.
Some CMCs also offer to claim back unfair overdraft charges, even though their chances of getting a good result in the short term are slim.
We went undercover on three leading accident management companies to see if they were ‘ambulance chasers’ as labelled by many. We questioned them on whether they offer cashback/referral fees on claims, how the claims process works, and would our claim (if we were to proceed) be sold off to a solicitor?
Premier Accident Management
Spoke with a gentleman called Shokat
He immediately stated we do not offer any referral fees or cash back. Was very firm with his decision on this. He went on to say “we take our fees straight from the third party insurers and do not take it anything from the clients compensation” When asked if they would sell on my case to a solicitor, Shaukat told me “we have our own in house solicitors who will deal with your case. Shokat did not try to hard sell or ask me to put my claim through his company. After I finished asking my questions he let me go off the line immediately.
Premier Accident Management have their own offices, situated on Heidelberg Road, BD9
Spoke with a gentleman called Ashfaq
He told me their procedure would initially be to vet the case and then have their own panel of solicitors who the case will be passed to deal with. So without being direct the company would sell on the case to a firm of solicitors that they have approved as their panel.
I asked if he would offer me cashback on my claim. His response “we have a couple of models. It gets complicated when cashback is offered, and it’s better not to do it that way, as it will just be deducted off your claim. But if you want cashback then that model is also available”
As I finished asking my questions, and was about to go off the phone, Mr Ashfaq continued to sell their services
“Come in and meet us. Some claims companies don’t even have an office or a set up. They could be running from a barbers shop. Come and see our set up. I am also a qualified teacher, so you know you are dealing with professionals”
Active Claims have offices based on Leeds Road, BD3
Spoke to a female called Rachel, Initially she just wanted my contact details so she could pass on to a solicitor to call me back and the solicitor would go through my claim. She told me she deals with administration only, but after a little persuasion helped answer my questions.
Claims Bradford will offer upfront fee, based on nature of claim. She also went on to tell me that they wouldn’t sell my case to another solicitor as they have their own solicitors, which I later learnt, were not their own in house solicitors but my claim would be passed to their approved solicitors called Clear Law, so it means that the case would most likely be sold on to Clear Law solicitors.
Rachel asked for my details again, but I asked if I could come see them instead. She told me they don’t have offices and that everything is done electronically. I later discovered Claims Bradford is a trading name of KSure Marketing Ltd, which is an advertising company registered in Liverpool. However, according to the ClaimsBradford website their head office is based at Dalton House | 60 Windsor Avenue | London | SW19 2RR
Wanted my details to pass on to a solicitor.
One of our female readers, who wishes to remain anonymous wrote in with her horrific ordeal with Claims Management Companies.
“I had an awful experience with a local claims management company, I was approached straight after my accident as the company that had towed my car from the motorway collision was in association with this company. My accident involved 6 other vehicles one of which was a lorry which collided with my car, leaving it un-repairable. The claims manager was pushing for me to make a decision there and then, even though I was visibly still in shock from my accident. Unfortunately for me I went ahead with the CMC. The CMC assured me my claim was a ‘dead cert’ and I would get a free courtesy car. It sounded too good to be true and it definitely was. After many phone calls, forms and emails building my claim, it ended up that the police were unable to establish blame for a certain party, so my claims company ‘advised’ me to say I was badly injured to try and push my claim. As this was not the case and I was not prepared to lie about it, the solicitors dropped my case and I was liable for my own damages, the claims company said that they were going to have to pay for my courtesy car. I started to receive nagging calls from the courtesy car company, who were trying to make me pay for its usage and I soon found that the claims company were very hard to get hold of. Not surprisingly the courtesy car company had not heard anything from the claims company suggesting they would pay the bill. What followed was another new statement for me to sign which was different from that which I sent to the police and the solicitors. I am so glad that I was smart enough to photocopy all of my statements and forms, so I could prove that this was not what I had said before. I was very lucky that the pursuit for money from me was dropped. So I would advise anyone considering a claim with a CMC to do your homework and make copies of everything!”
The good news is that from April 2013 there will be a ban on referral fees in personal injury cases. Any breaches of the ban would be subject to appropriate regulatory action by the relevant regulators, the Solicitors Regulation Authority (SRA), Financial Services Authority (FSA), the Bar Council and the Claims Management Regulator.
Those claims management companies currently receiving referral fees for providing access to claimants in personal injury cases will no longer be able to operate in their current form.
If you have used a claims management company for a PI claim or to ger PPI redress, tell us about your experiences by writing in to firstname.lastname@example.org