/ Money

Claims management companies come with two big catches…

Man stuck in a jar

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.

tes says:
7 April 2019

I had aCMC who my wife was using . Called my wife saying they need to speak to me r.e ppi on a card that I held previously I never asked them to do a ppi check for me and did not sign anything upto then , I now think this was not quite legal for them to do . They did get me to sign up but I made it clear and only signed for the ones I wanted checked , They went ahead and made a claim against another bank , In the meantime there was a lot of issues and harassment from them I contacted their complaints dept who closed all cases , now I have received a offer from a bank other than the ones I signed for checks . do I have to pay them . as they actually cold called and done a check without my permission or signature and in writing closed all cases before I have offer

Nicky says:
18 July 2019

Hi John, can you help. I recently made an enquiry to a PPI company through a face book ad. They sent me some forms but i didnt fill them in. They went ahead and contacted my banks anyway. The banks contacted me and I filled in the forms and sent them back to the banks. I had 2 payouts. The PPI Co have sent me their invoices, one I paid as I though I had to as they are a ‘solicitors’, the other I disputed. The sent a revised price and then I disputed that too. I asked for their complaints procedure which they have ignored and I then asked for a copy of the contract they alleged I signed. When they sent it, it was a form i had never seen before and the signature is clearly not mine. They said it was a serious allegation and that they would contact the police. I said fine so they said they would first get proof it was my signature through my IP address. Anyway, I’ve had that proof and it is only a screen grab of my initial enquiry, which i dont deny doing. There is no signature on it. They say its an electonic signature, which I signed when I fileld in a questionnaire. I didnt fill in a questionnaire and I dont have the ability to sign a digital signature on my phone. I have referred this to the SRA and they have advise that cant investigate because they cannot prove the signature is not mine. I have contacted CAB and they said they will refer to Trading Standards. They are threatening court action if I dont pay. Should I advise them that I have contacted the CAB. CAB had stated that I should use the ‘unfair business practice’ angle and ask for 100% discount on the charges. They are very intimidating. I am really worrying about this. I paid one charge of £578 because they were writing and calling daily, but I dont want to pay the £458 they say I owe them for the 2nd payout. I did not give them permission and they have forged my signature. Thank you Nicky

Nicky – I am not sure whether your request is addressed to me but I have considered your comments carefully.

On the basis of what you have written the PPI compensation claims agent cannot pursue you for money. They do not have your signature on a relevant document and in any case the burden of proof that it was a document signed by you would lay with them.

You have contacted Citizens Advice and in my view you should stick with them, follow their advice, do everything they say, and do nothing they have not advised. The last thing you need is the possibility of any alternative or conflicting advice so I must leave it there. I hope it all goes well for you.

Nicky says:
18 July 2019

Brilliant thank you very much.

Sharron Harries says:
14 September 2021

A claims management company got a PPI claim back for my husband who died in 2017. One of the agents told me that if the loan the PPI was taken out on was not in joint names then I would not have to pay the claims management company the fee they are asking because it would be a debt in my husbands name???. The money was paid out this year (after my husband died).