Thousands complain about claims management firms

Claims management companies are making consumers' claims more complicated by charging unjustified fees and causing delays, according to the Legal Ombudsman.

The Legal Ombudsman said it has been contacted nearly 9,000 times in the first six months since it launched a claims management company complaints service in January.

It accepted 648 complaints for investigation and has resolved 478 - of which more than half (53%) required action to put the situation right for the consumer.

Around a third (34%) of cases required the firm to limit/ waive fees or pay compensation - with the average financial remedy ordered being around £650.

Claims management firms take up different types of claims on behalf of consumers in return for an up-front fee and/or a chunk of any compensation paid if the claim is successful. Often, claims will be for mis-sold payment protection insurance (PPI).

The claims industry is worth £772 million a year, making it big business for the companies involved, the Legal Ombudsman said.

The ombudsman said that for many people, claiming back PPI costs can be stressful.

Consumers can make a PPI claim themselves for free rather than using a fee-charging claims management firm and the Financial Ombudsman Service can offer help on how to do this.

The Legal Ombudsman said almost half (40%) of the disputes it looked at were about costs - including unjustified fees, a failure to refund up-front fees, or contractual disputes.

Around a quarter (23%) were about delays in progressing claims or a failure to progress cases properly at all.

Failures to provide adequate advice or keep customers informed were also key causes of complaints.

Claims management firms have come under fire from banks for bringing bogus and duplicate claims.

The Legal Ombudsman was set up as a free, independent scheme to help resolve legal service disputes.

The Legal Ombudsman's head of claims management companies, Simon Tunnicliffe, said: "We are pleased to have been able to help all those people who have contacted us so far."