Claims management companies were back in the news this week after an undercover Which? investigation at 25 firms revealed that all offered misleading advice. That won't come as much of a surprise to critics of the industry, but the scale of the poor practices and dodgy activities really is astounding.
The companies target people who may have been missold insurance or other financial products and say they can help them make a claim against the bank or insurer concerned. They dangle the carrot of compensation in front of people which is a tempting proposition. But the truth is that most people should be able to take their own cases to their financial provider and, if they get no satisfaction, onto the Financial Ombudsman Service.
True, some folk may need a bit of hand-holding when it comes to dealing with a financial institution but, there is plenty of free advice online or through Citizens Advice.
Let's face it, these firms aren't in it to help people; they're in it to make money. They have every right to do so, of course, unless they trick people into needlessly using their services and paying their fees. And that's what Which? found happened in every case they investigated.
Which? researchers posed as people who thought they may have been missold payment protection insurance and were told they had little chance of making a successful claim without the intervention of the claims managers.
Two-thirds of the firms didn't mention the Financial Ombudsman Service, which they are required to do. One even stated: "If the bank rejects your claim, there's nothing you can do." Another firm told the researcher: "You have over a 90 per cent chance of claiming it through us, or under a 10 per cent chance of doing it by yourself". That's nonsense and is a good reason to crack down on the activities of these chancers.
Half of the people who have used a claims management company told Which? they had been cold-called. The firms should be barred from doing this. The Ministry of Justice should use the Which? evidence as the basis of its own investigation and force firms to act properly or be closed down.
When I criticised claims management companies in a column earlier this year, three people commented online in quite aggressive and unpleasant terms. It was relatively simple to discover that they all worked for the same claims management firm based in Manchester. Their actions seemed redolent of an industry that's out of control.Reuse content