Simon Read: Action at last against claims managers
Saturday 20 March 2010
I have often written about claims management companies in this column as I believe their activities to be largely reprehensible. They prey on hard-up people by telling them that they can write off their debts and be free of financial worries. But often they simple take a fee from a desperate person and do nothing to help them, leaving then in an even worse position.
But there was some good news this week when the Ministry of Justice finally shut down one of the biggest claims companies, Cartel Client Review. As we reported last Saturday, Consumer Credit Litigation Solicitors (CCLS) – the firm that provided legal services for CCR – was shut down by the Solicitors Regulation Authority after accusations of "suspected dishonesty". The law firm was discovered to have tens of thousands of customer files just put in boxes, almost untouched.
Now that Cartel has been shut down, the full extent of its activity is likely to be revealed. It advertised in downmarket newspapers with suggestions it could help people walk away from their debts. In return for a £495 fee, Cartel said it it would check if people's debts, such as on credit cards and other loans, could be legally challenged and written off. In fact, it passed on the actual checking work to solicitors like CCLS.
Cartel is believed to have taken about £20m from up to 70,000 hard-up customers over the past two years. It did have some successes, in that lenders decided to pay up rather than face massive court costs, but those successes were minimal. In effect, it appears that all Cartel did was pocket people's fees while very little work was done for them.
Cartel's activities began to unravel after a series of court cases put paid to its contention that people could write off their debts through a legal loophole. The main argument put forward by Cartel and rival claims companies was that loan agreements struck before April 2007 could be challenged in court under the terms of Section 78 of the Consumer Credit Act and cancelled if the lenders were unable to produce a copy of their original agreement, or if the agreement was illegible or did not contain the specific terms required under the Consumer Credit Act.
But a case in December confirmed that banks and other lenders are allowed to "reconstitute" their terms and conditions to show that their original agreement with a borrower had been in line with the law. In other words banks and other lenders have ery right to chase debts even if they have lost the original agreement.
The Ministry Of Justice announced it was investigating Cartel in February. On Thursday it shut the firm down by suspending its authorisation. However, there are still plenty of other dubious claims companies out there and the MoJ should act and shut them down too.
For customers of Cartel, the Ministry's move has come too late. Cartel's boss, Carl Wright, said this week that the firm doesn't have the money to repay clients. There seems little chance therefore that people suckered in by the adverts will see any of their money back.
The MoJ could only advise: "If you are a customer of CCR your agreement with them, as with any provider, is a private contractual matter between yourself and the provider in which MoJ cannot intervene directly because it is not a regulatory matter for which MoJ has responsibility." In other words, tough.
Other claims management firms are already circulating over Cartel's carcass with one dodgy outfit proclaiming: "Been screwed by Cartel Client Review? We will take over your case." Sadly such opportunism is likely to be rewarded by confused people tempted by the chance of getting their fees back, when all they're likely to get is fleeced of even more cash.
There are lessons for everyone involved in this sorry tale. The claims management industry has come under criticsm from all sides since it started just over two years ago, yet the MoJ still went ahead and issued trading licenses to hundreds of firms. It has subsequently shut down several, but the principle that almost anyone can set themselves up to offer people what is perceived as financial advice is totally wrong. Anyone who has turned to these firms for help has been misadvised and probably have lost money.
On the other side of things why have so many people felt the need to turn to these firms? Largely in desperation, I suspect. Some may have foolishly believed they could walk away from their debt, but most were tempted by what they thought of as a legitimate way to take on their banks and credit card companies and their excessive charges. If it had been legitimate, would the charges have been so high?
A fond farewell to unwanted cheques
MBNA has announced plans to scrap credit card cheques from the end of the month. It should have happened years ago. The cheques have been sent out unrequested to credit card holders for years. While most people have simply torn them up, struggling folk have been tempted to borrow extra cash.
But the price has always been high and those who have been tempted are often those who can ill-afford to do so. A £500 cheque could easily spiral by an additional £150 in just 12 months once the fees – at 3 per cent – were added to interest at 28 per cent.
"Sending these cheques to people with little financial discipline or willpower was akin to posting bars of chocolate through a school letterbox," says Andrew Hagger of Moneynet.co.uk.
The other issue with them was security. Because recipients didn't know when they were sent, they would have no clue if they were stolen until the bills started arriving. Although the credit card companies would have been liable for any losses, there was still the inconvenience.
So let's hope others follow MBNA's move and end the blight of the unwanted and expensive credit card cheque.
Will your credit card rewards be scrapped following new EU rules on charges?
Buyers beware of new-build home headaches
Bargain Hunter: First Utility's Cosy deal lets you heat your home from anywhere
What would happen if you put a statistician in a casino with £1m?
10 tips for taking out a personal loan
- 1 Migrant crisis: Greek soldier saved 20 people singlehandedly off Rhodes beach
- 2 Sofyen Belamouadden murder: The inside story of a crime that horrified Britain
- 3 Company breaks open Apple Watch to discover what it says is 'planned obsolescence'
- 5 UK weather: Britain braced for snow as arctic air mass moves in
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband
The sickening truth about food banks that the Tories don't want you to know
Migrant boat disaster: Ukip candidate mocks victims in sickening Twitter post
Nigel Farage wants the BBC to stop making programmes like Doctor Who, Strictly Come Dancing, and Top Gear
Global warming: Scientists say temperatures could rise by 6C by 2100 and call for action ahead of UN meeting in Paris
General Election 2015: Britain would become a 'communist dictatorship' under Ed Miliband and Nicola Sturgeon, claims wife of Michael Gove
iJobs Money & Business
£20000 - £22500 per annum + OTE £30K: SThree: SThree Group have been well esta...
£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...
£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...
£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...
Day In a Page
Surrounded by the Western fells, this five-bedroom Georgian home retains many original features including panel-plastered ceilings, sash windows and fireplaces.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B, subject to change of use permissions.
A former period coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, office, kennels and an outbuilding that's currently used as a gym.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
This four-bedroom home has exposed brick chimneys and a vaulted ceiling in a breakfast room that's ideal for summer entertaining - the doors open to the patio and garden.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
A boutique mews house, set around a central courtyard, with three bedrooms and a private roof terrace