/ 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.



Here’s the key – if you’ve been mis-sold PPI and you’re owed that money back, it’s yours

Actually, *here’s* the key: instead of expecting to have your nose blown and your backside wiped for you by ‘the banks’ why not try a new idea? How about taking personal financial responsibility? How about reading the terms and conditions of a loan agreement BEFORE signing? How about not borrowing more than you can afford to pay back and then whinging because your mortgage has been pulled in? How about that? This whole argument is BUNKUM.

These are ADULTS who can buy a house, get married, have kids, vote, fight for their country in a war, but they can’t be expected to look after their own finances? Utterly ridiculous.

Honest kind person :) says:
7 April 2015

Not everyone understands finances and small print not to mention when your bank manager is “helping” you get better credit rating, what are you supposed to do??! If people weren’t unscrupulous in the first place ppi wouldn’t of been missold in the first place.:)

[This comment has been edited to align with our commenting guidelines due to offensive language. Thanks, mods]

Keith says:
2 December 2015

Some of these adults are old age pensioners unknowingly suffering from dementia , others may not be as educated as you and I or may just be having one of those days, In fact there’s a million reasons why someone may have been duped by their bank. the question isn’t whether they should be more responsible it’s whether the banks should be breaching the trust of their customers whom for the most part are led into a false sense of security. The bottom line is that financial services are out to make money by whatever means they can with total disregard for their customers, and now it’s payback time.

John E Robertson says:
23 September 2011

Absolutely!! All such advertising in ANY media should be barred, and companies caught cold calling heavily fined. Hitting their pocket it the only way of stopping this, I sometimes wonder if governments reluctance to take action is due to some MPs having a finger in this pie.

karena says:
4 April 2012

hi,we have gone though a company to claim ppi they are called (investor compensation) our claims have not been big approx £1200, £1100 & £144 & we have been charged 30% plus 20% vat so that 50% out of our money,can they charge this much for claiming for us,we are also still waiting to hear from them about other claims,thx

Hello Karena,
If you use a claims management company (CMC) to make a PPI complaint on your behalf they will charge a fee for the service. These fees vary, but 25 or 30 per cent is fairly typical. You should check your contract to see how much they should be charging. If you are charged 30 per cent plus VAT this should be a total of 36 per cent not 50 per cent (30 * 1.2 = 36). You could contact Citizens Advice for help – http://www.citizensadvice.org.uk and (08444) 111 444. You can get legal advice from Community Legal Advice – (0845) 345 4 345.

You don’t need to use a CMC to make a complaint on your behalf. See, http://www.which.co.uk/campaigns/personal-finance/the-ppi-campaign/, for information on how you can do it yourself for free. You can also contact the Financial Ombudsman Service on (0800) 023 4567 and http://www.financial-ombudsman.org.uk.


Mike Naylor – Which? Money Helpline Adviser

chengo says:
23 August 2016

dont just pay the cmc, i used one about 2 years ago, i never paid them. They did nothing. How can you pay someone when the bank clearly states that ppi claim is your money and it is free to claim. The cmc are just posting an envelope with a form filled in from the banks website which you can do yourself. How can you pay them your money for doing that. Do not pay them.

But can the claims company take me to court for not paying?
The bank told me that new legislation came in last November 2016 and they have to refund; Ascend finance put in the claim with me just ticking boxes, I did not sign anything.

no hassle to do it yourself.phone or write for the form.i used a company who sent an e mail and still had to fill out exactly the same form ,for which i ended up giving 30%. i feel mugged.

Lurlin Simon says:
1 November 2012

Early last year I logged a complaint for PPI with one company and was told that it was not successful and they will take the case to the Financial Ombudsman. This was around May-June last year. Around April-May this year I received a call from Investor Compensation about PPI. I explain my situation and was told that they can still help. I filled in the form and returned it. In August I received a FOS form from the previous company to fill-in. Today Investor Compensation calls me, I told them what was going on with my previous claim. They then told me that they are going to bill me for the work they have done. Since sending off the form. I have not heard anything from them until today.

Jeangoo says:
1 January 2013

I had a call from Crystal legal offering me help of reclaiming my mis-sold PPI and said I was owed at least £13k plus interest, their fee for this would be 30%, and said not to accept any offers made by my bank, unless through themselves. However, they seem to have accepted the same offers made by the bank?

I have received the various offers of refund for 5 of my 8 loans from my bank totalling approx £8k but they now require further information regarding the other 3 loans (even though they gave the PPI company the details of these loans)? The PPI company have requested their fee of 30% plus vat hence 36% for their fees which they had not initially mentioned.

However, the PPI company do not seem too bothered about the other 3 loans (they obviously feel they have earned enough fees out of the 5 loans).

lol b says:
1 January 2013

same as jeangoo i had two with the same company but they only pursued the larger one.maybe by now they know which companies are less hassle.on one of my loans i was forced to take ppi in case i felt like getting a divorce – ridiculous still married. As i originally said dont be afraid go to the companys website and request the ppi complaint docs . keep all copies and send important recorded delivery,dont worry if initial approach is refused-send docs to financial ombudsman. can take up to 2-4 months for decision-just mark up your calendar.

Hi. I got a ppi claim April last year bank paid me direct. 6 month later ppi call me to say I should get a cheque any day. I thought this was for another claim. But then they realised it was earlier claim and bank had just told them I went toCAB with my paper work and they underlined bit that said there fee be taken off and balance sent to me. So CAB say that was the contract. But ppi still trying get me to pay them. Even offered 10percent off in yesterday’s letter. Where do I stand ?

What my friend was the outcome? As I’m in same position ?

Hello. I as contacted by Direct claims Advice over a year ago regarding PPI and was sent some documents and returned them and never heard anything from them til this week Nearly a full year later, they said the bank had refused to discuss claim with them because i had not filled in TP authority mandate form and asked me me to sign some documents and TP auth mandates. The bank then wrote to me seperatly and made me an offer, if i accept this offer direct will i still be liable for pay the PPI company their 25% even tho they have no written authority mandate allowing them to deal with my case with RBS, Any advice would be appreciated. I have not signed or returned anything to them at this moment

i have just had a conversation where they told me to ask for the tp authority copy to be sent to me, or its contractual agreement, if you find there definataly is not one when they are suppossed to send to your email address, then phone the legal advice ombudsman for those companys and tell them and they will deal with it for you. the phone number is 03005550333. from bertie.

Alyson says:
3 June 2013

Can anyone help clarify for me whether my situation constitutes mis-sold PPI. Back in April 2005 I bought my first house and arranged my mortgage through a Financial Advisor/Mortgage Consultant (who happened to be the company the seller was using to sell the house). It all seemed logical at the time to use this Company to I took their advice and arranged my Alliance and Leicester mortgage through them. I was advised that I would need to take out Mortgage Life Insurance (including critical illness cover) as this was a condition of the morgage, however, it did NOT need to be with Alliance and Leicester. I was offered a Norwich Union policy which I took up and paid in to for a few years until one day when I questioned myself why was I paying it and decided to cancel it without any repercussion on my mortgage!

Please can anyone tell me if I have a case and who I should contact to start the process.

Thank you.

richard rogers says:
13 June 2013

I claimed my PPI through a company called Claims Advisory, They charged me 30% on what I got back. I got the cheque banked it and because we where having financial problems all the money went. Now the company want their money which we cannot afford to pay back. What could happen now? They have now given me 7 days to pay up or else interest will be added. Cant understand how interest can be added as I didn’t go to them for a loan.


Charged for asking people to stop says:
27 October 2013

I claimed through a company called Consumer Finance Claims and am feeling under some serious pressure. The claim was going nowhere after a long time and the firm where asking me for information i could no longer give. I continually told them I could not give them this information and eventually, from what i thought was out of decency, told them to stop the claim as it was going nowhere. From this they have piled on a huge bill with threats of taking me to court if i do not pay. Is there anything i can do, or has anyone had this problem before?

stephen says:
29 December 2013

I went to ppi company to get my money back from rbs,the company got me to sign agreement and send back,hardly heard off them,then 8 weeks into claim,i rang ppi company up ,asking whats going on with claim,i was told it had been rejected,by bank.i then rang bank to be told my claim was still being soughted,and they never said it had been rejected,ppi clearly lieing.1 week later I ring bank,they have sent out check,it got stuck in xmas post,meantime they must of informed ppi company,who are demanding 728 pounds,now or interest,ect,ect.will be added if not paid in 7 days.i haven’t even got the cheque yet,plus now im starting to think ,exactly what did they do for 728.plus telling me it was rejected .were do I stand if I don’t pay this company.any help,thanks.

Carol says:

I have just been phoned by Precision Direct re a PPI claim from 10 years ago and to be honest I know I have had finance but not certain what it was for or whether it was actually through my Bank or a Finance Company. He told me that he would put me through to a Legal Company and they would then send me a package to read and then sign if I was happy to proceed. They passed me to Crystal Legal and I was asked loads of questions re other possible Bank loans etc. I was then told someone would bring me over the forms to sign to allow them
to continue. I was not happy with that considering what I had already been told and said i would like to see the package first to read and see if I wanted to continue. They told me that they take 30% plus VAT and on reading above comments etc am wondering if it would be better for me to go to my Bank and check what loan they are referring to. Would appreciate your comments.

ian aspinall says:
1 December 2015

I saw an advert on facebook for the Claims guys filled out the forms found out that I had over 5 grand owed to me, then found out that if you have any past debts with them then the money would go towards repaying that, I was fine with that, what I was not told was I would still be charged over 1800 even if I did not recive any monies, they are now saying they will take me to court for ccj and send the bailfs in I have reported them to the Ombudsman for not stating they would still charge , they (the claims guys) have not respoined to phone calls, letters or emails

hi im the same how did you get on . ive not not received any money its gone to a debt recovery agency which is ok. so i not received any monies surely i dont owe the claim guys

I claimed successfully ppi but confused as to how much vat they can charge. What is the going rate 20% or 30% how do they arrive at that amount? is there a set amount? Help

I got PPI refund and was charged £134 approx 9 months ago , I duly paid this but the company are now saying that when I paid the requested amount that they made a mistake and now want another £134 .
I’m receiving daily e mails and threats of court and costs ! Do I have to pay ??

Julian says:
10 November 2017

If they take you to court it’s going to cost them a lot more to do so and technically I don’t think you should pay for there mistakes,
and you can always change your email address

Stephanie says:
15 January 2016

I was contacted by email on 15/01/2016 by a PPI company called Claim Advisory Group Limited as in 2009 they contacted me to make a claim on my behalf. I was not too sure when I received the paperwork although they told me just signed the form and send it back to them ASAP. I enquired what would be the exact fee for their service and they were unable to gave me a direct figure. I contacted my bank and investigated my own PPI . I was chased by the company and they told me to “Just Signed the form ” although I told them that I had already started the process with my bank. Again I was just bagged so I signed the form as they told me I would not get through myself. I received my money direct to my account from Nat west and a few weeks later I received an invoice from the PPI company Claim Advisory Group .
I want to know what are my rights here as clearly me contacting my bank has some weight here and I think the government has a responsibility to put out a proper advertisement about PPI and how someone could make a claim and shut down these PPI companies for good.

Do not pay them. You have been mislead. Before long there will be claims against these PPI companies, believe me.

Danny says:
18 February 2016

I made a claim against mis-sold PPI and the bank rejected it. 2 -3 years on I went to a PPI company and asked them to look into my Credit Cards and possibly a loan. I received a letter from my bank telling me that they are looking into my original claim as they think it was mis-sold and they then apologized and sent me further details of investigation that they had done and sent me a cheque . My PPi company have just told me I am liable for 30% even though the bank has refused to speak to them.
Can this be right?

I’m afraid I fell for the.
You have paid.
so get it back
I had no idea I would have to pay so much.
I should have known you don’t get anything for free
I never knew or though of reclaiming.untill I got mixed up with the day light robbery team who promised me money.im not really clever and fell hook line and sinker.
If any one wants money back.Just ask the bank yourself.save a load of depression.its made me so down.
Nothing but thieves.at least banks don’t LIE to you

Hi Karen, welcome to Which? Conversation. I’m sorry to hear that you’ve had problems with a claims management company. If there’s anything you’d like to talk to us about then please email us at conversation.comments@which.co.uk