The compensation payout for payment protection insurance is a headache for consumers and banks alike, yet there is one group rubbing their hands in glee as the true scale of the mis-selling scandal unfolds.
Claims management firms will rake in more than £50million in fees this year from PPI victims, despite providing a service that you can do yourself. So how should you deal with firms that target via text, phone or email?
Claims management companies contact consumers to encourage you to make a claim for compensation. This can be for personal injury following an accident for example, or in the case of PPI, if you have been the victim of mis-selling. They will manage your compensation claim in return for a portion of the payout.
The PPI scandal has fuelled a vulture-like approach from claims firms who are bombarding the public with millions of adverts, texts and emails urging us to use their services to claim for compensation.
Despite charging consumers up to 30% of the compensation they claim and the FSA stressing that using a firm makes no difference to your chances of success – these firms continue to attract millions of claims.
Are they ever useful?
To claim compensation for PPI, there is no need to use one of these firms.
"We've always emphasised that there is no need to pay a third party to make a complaint," says Natalie Ceeney, the chief ombudsman. "Why pay someone else to do it for you when you're just as likely to win by doing it for yourself for free?"
However, there are some personal injury cases where it can be beneficial to employ a firm to act on your behalf. Yet there is a big disparity between the genuine good guys and pushy rogue 'ambulance chasers' who are less than reputable. So how can you tell who to trust?
- Calls and texts Claims firms are persistent. Even texting back 'STOP' will confirm that your number is active and can trigger further contact. If you are recieving repeat texts and calls, report the number to your mobile phone provider who can block it for you. If you do take a call, ask the company how it got your number and request to be removed from the list.
- Beware hidden costs If you decide to pursue a claim through a management firm, look out for deductions and charges hidden in the small print before signing up. You are entitled to 100% of your compensation so ask outright to check that this is the case.
- Don't get stung by legal fees Your solicitor should recover its costs from the other party it is claiming from and you should have to foot the bill for have costs it cannot recover. Look for details about fees and costs on the company's website, but always ask for clarification before you sign up.
- Customer service Reputable companies should have a client-care policy outlined on their websites. It is reasonable to expect to be regularly updated on the progress of your claim – usually every two weeks – and for your calls to be answered within 24 hours.
- Trust your instincts Remember that if a firm's claims about how much compensation they can win for you seem too good to be true, they probably are. There is a growing number of rogue traders so have your wits about you and if in doubt, check the FSA's list of unauthorized firms and give them a wide berth.