Picture the scene; you get a call, telling you that you may be entitled to a refund for a product you know nothing about and didn’t even know you had – Payment Protection Insurance (PPI).
So what’s the catch? Well, you’ll be charged. But hey, it’s no win no fee, so if they don’t get your money they don’t get anything either. Or, they charge you a small amount, but again, it’s fully refundable if they can’t get it back.
Sounds fair enough. After all, you might not know anything about drains, so when the sink’s flooding you call a plumber. Or if you’re having trouble with ghosts, who you gonna call? Unfortunately the devil’s in the detail, and there are two key points that you have to consider:
1) The companies that claim to help you reclaim PPI aren’t playing by the rules.
2) It’s as easy as it can possibly be for you to claim yourself.
1. The companies aren’t playing by the rules
Our investigation found a huge range of problems with claims management companies. Firstly, there are the fees. Consumers are owed around £7.4bn by the banks, but these companies typically charge around 30% after VAT. So, with the average individual PPI compensation award from the Ombudsman coming to £2,750 we’re talking about the average consumer paying £825.
But there are also problems around what they define as ‘compensation’, and consequently what you get back. You might think they mean money you’ve paid and are being compensated for. Wrong.
Some firms include a reduction in future loan repayments as part of the compensation, so what you would have paid in future, and only a portion of it will be cash you’ll receive.
There were also issues around transparency. Because there’s a free service in the form of the Financial Ombudsman Service (FOS), CMCs have to make you aware of it – but two-thirds of the companies we spoke to didn’t. They’re also not allowed to suggest you’d have a higher chance of success, or get more back, using them instead – again six of the 25 we spoke to did.
What’s more, some of them charge money upfront, locking you in before you consider your options, and others call you up out of the blue offering to process a claim on your behalf. We’ve heard of people who didn’t even have PPI agreeing to let these companies look into their ‘claim’ and then being billed.
2. Unsure if you have a claim? Look into it yourself
Here’s the key – if you’ve been mis-sold PPI and you’re owed that money back, it’s yours, and you shouldn’t have to give up a portion to someone else. You might be uncomfortable dealing with your bank directly, but there’s loads of independent help available, and if you run into trouble there’s FOS – a free independent mediator – who will look into any dispute.
Finally, after years of fighting, the banks have given in and are now required to deal with your complaint according to prescribed guidelines. It’s not an exaggeration to say that – for an issue as complex as this – it could not be easier for you to claim yourself.