Proposals to cap claims management companies’ fees are on their way, but is the Government missing a trick here? Why not make the banks pay for the cost of claiming?
CMCs are the ones that contact you to tell you you’re due a PPI refund, or ask you if you’ve ever had a packaged bank account. Often a major source of nuisance calls, for some they can be a real pain.
But for others, these firms can help identify where compensation is owed and make claiming quicker and easier, even if in reality there is very little work that needs doing. The problem, however, is the extortionate fees they charge.
Well, there have been some interesting recent developments from the Government to tackle the behaviour of CMCs. But we’re wondering if the Government could be missing a trick here…
Missed a trick
There are plans to introduce a cap on the fees that CMCs can charge people. And when CMCs charge up to 40% of your payout, for what might be a small amount of work to progress a claim, no wonder people are left feeling ripped off.
The argument is that by introducing a cap, claimants keep more of the money they are owed and walk away with a better result.
But surely claimants wouldn’t feel the need to use a CMC in the first place if firms were much better at helping customers access the compensation they’re entitled to in the first place?
Better conduct, better customer service
That’s why we’re calling for the Government to take action on financial firms’ conduct in the upcoming Queen’s Speech. We’re asking the Government to announce new legislation to make financial firms responsible for paying the costs of CMCs when they’re at fault.
The way we see it is that if firms themselves have to cover the costs of CMCs when they’re at fault, then they’ll have a clear incentive to make sure as few people as possible pursue claims through CMCs. It would encourage firms to be more proactive in identifying and contacting mis-sold customers, for example, and do more to help them get their money back – possibly even making the redress payment automatically. Obviously, consumers will benefit as they’ll keep more of the compensation they’re owed, and CMCs offering little value should be squeezed out of the market – meaning less nuisance calls.
So what do you think? Should banks have to pay the costs of CMCs who claim successfully on behalf of consumers?
Do financial firms need to do more to help people with claims?
Yes (91%, 758 Votes)
Don't know (6%, 53 Votes)
No (2%, 18 Votes)
Total Voters: 829