Claims firms preying on PPI victims
The constant pestering of claims management companies is bad enough, but now they are under fire again for failure to be up front about fees and chances of a payout. So should we just shun these firms altogether?
Citizens Advice is calling for claims management companies to be banned from charging up-front fees, as failure to deliver on these claims often leaves customers worse off than before.
The call comes ahead of findings from a new report 'The claims pest' due to be published next week. It will expose the predatory tactics of claims management companies who are inline to pocket £2 billion from people who have been miss-sold PPI.
"Claims management companies are preying on people who have already lost out thanks to the banks' mis-selling," said Gillian Guy, chief executive of Citizens Advice.
"These companies are a hindrance, not a help. We see people who end up worse off because, despite having a successful PPI claim, the compensation goes to pay off their debts and they are saddled with a large fee. Plus many people are paying up-front fees, yet never get a penny of a payout."
SneakyFigures from a Citizens Advice poll found that two in three claims management companies failed to inform people how much they would charge for their services, while 72% didn't say when they would charge their fees.
Less than half of firms were clear about people's chances of success and four out of five did not inform customers of their cancellation rights.
Money for nothing
Citizens Advice is urging the Ministry of Justice to ban claims management companies from charging up-front fees, which average £600 despite claimants often not knowing if they have any chance of success. One CAB saw a client who had been charged an extortionate £3,300 in up-front fees alone.
Yet consumers do not need to pay anything to make a claim for PPI compensation and these firms do nothing that you cannot do yourself. Victims of mis-sold PPI are urged to contact their bank directly to make a claim and fill in the appropriate forms. If help is needed, the Citizens Advice offers advice completely free of charge.
"You can make a claim for mis-sold PPI for free yourself. We have template letters and online advice about how to make a claim and advisers in your local CAB can also help," adds Guy.